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$10,532,340,521. 46,301,656. Business Unless the context requires otherwise or unless otherwise noted, all references in this Annual Report on Form 10-K (this Our Commercial Products of prostacyclin, IP prostacyclin receptor agonists bind selectively to (and activate) the IP receptor, one of several prostacyclin receptors. Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights Outside of the United States, Remodulin is the table above. and patients do not need to use cooling packs or refrigeration to keep it stable. Treprostinil is highly soluble under certain circumstances and highly potent, which enables us to manufacture Remodulin in concentrated solutions. This allows therapeutic concentrations of Remodulin to be delivered at very low flow rates via miniaturized infusion pumps for both subcutaneous and intravenous infusion. Remodulin can be continuously infused for up to 48 hours intravenously which, unlike subcutaneous infusion, requires intravenous infusion line placement and carries the risk of serious bloodstream infection. Orenitram is currently only approved in the United States. 2023. For further detail, see the section below entitled an event-driven study of ralinepag in PAH patients with a primary endpoint of time to first clinical worsening event; and (2) our collaborators announced several key achievements in our organ manufacturing program: United States. Distribution of Commercial Products International Distribution of Tyvaso, Remodulin, Orenitram, and Unituxin We entered into exclusive agreements with Ferrer to distribute Orenitram and Tyvaso throughout the territories where it also has distribution rights for Remodulin. Initial feedback from the EMA has indicated that approval of either Orenitram or Tyvaso would require another large clinical trial of the applicable product. As such, the likelihood of commercially launching these products in Europe is remote. We distribute Unituxin in Japan through a third-party distributor that obtained Japanese marketing authorization during the second quarter of 2021. In addition to the treprostinil patents noted above, we have other patents specific to our individual treprostinil-based products, including the following: new indication that Orenitram delays disease progression in PAH patients. This exclusivity expires in October 2026. Orenitram for PAH, and we would be obligated to make additional milestone payments if we develop Orenitram for a second indication. In addition, the agreement provides that we will pay a single-digit percentage royalty based on net worldwide sales. 2026. and Challenges to our Intellectual Property Rights License Agreement Unituxin. Agreements DEKA to manufacture and supply the Remunity Pump. Under this supply agreement, we are responsible for all costs associated with manufacturing the Remunity Pump. The Remunity Pump is covered by issued patents and pending patent applications both in the U.S. and other countries. The expiration dates of currently issued U.S. patents range from 2027 through 2033. produce ralinepag. Bayer Schering Pharma AG, as well as a variety of large generic drug manufacturers. treprostinil) (phase 2); PhaseBio Pharmaceuticals, Inc.’s pemziviptadil (PB1046) (phase 2); Enzyvant Therapeutics GmbH’s rodatristat ethyl (RVT-1201) (phase 2); Gossamer Bio, Inc.’s seralutinib (GB002) (phase 2); SoniVie’s TIVUS™ (pivotal trial); Respira Therapeutics’ vardenafil (RT234) (phase 2b); Cereno Scientific’s valproic acid (CS1) (phase 2); and Bial Portela C.S.A.’s zamicastat (BIA 5-1058) (phase 2). survival rates. In October 2019, the FDA approved a supplement to our Orenitram NDA expanding the Orenitram label to indicate that it also delays disease progression, in addition to improving exercise capacity. We bone or bone marrow. Y-mAbs launched commercial sales of Danyelza in 2021. Y-mAbs is also conducting studies of naxitamab for frontline high-risk neuroblastoma. sanctions, such as FDA refusal to approve pending NDAs or BLAs, warning letters, product recalls, product seizures, total or partial suspension of manufacturing or distribution, injunctions, fines, civil penalties, and criminal prosecution. In May 2018, the Right to Try Act established a new regulatory pathway to increase access to unapproved, investigational treatments for patients diagnosed with life-threatening diseases or conditions who have exhausted approved treatment options and who are unable to participate in a clinical trial. The Food and Drug Omnibus Reform Act ( Adverse event reporting and submission of periodic reports continue to be required following FDA approval of an NDA. In addition, as a condition of NDA approval, the FDA may require post-marketing testing, including phase Registrant'sTitle of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $.01 per share and associated preferred stock purchase rightsUTHR NASDAQNasdaq Global Select Marketý☒ No o☐o☐ No ý☒ý☒ No o☐and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý☒ No o 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. ý"large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act:Large accelerated filer ý☒ Accelerated filer o☐ Non-accelerated filer o(do not check if asmaller reporting company)☐ Smaller reporting company o☐ Emerging growth company o☐ o☐ No ý☒2017,2022, as reported by the NASDAQNasdaq Global Select Market was approximately $4,948,421,509.issuer'sissuer’s common stock, par value $0.01 per share, as of February 14, 2018,15, 2023, was 43,239,722.registrant'sregistrant’s definitive proxy statement for the registrant's 2018registrant’s 2023 annual meeting of shareholders scheduled to be held on June 27, 2018,26, 2023, are incorporated by reference in Part III of this Form 10-K.PART IItem 1.BusinessRisk Factors36Properties52PART IISelected Financial Data561 PART IIIPART IV SIGNATURES2 United Therapeutics, a public benefit corporation ITEMBUSINESS United Therapeutics Corporation is a biotechnology company focusedcommercializationa distinctive, entrepreneurial culture that encourages diversity, innovation, creativity, sustainability, and, simply, fun. Since inception, our mission has been to find a cure for pulmonary arterial hypertension (PAH) and other life-threatening diseases. Toward this goal we have successfully obtained approval from the U.S. Food and Drug Administration (FDA) for several medicines, we are always conducting new clinical trials, and we are working to create an unlimited supply of innovative productsmanufactured organs for transplantation.addresstake the unmet medical needsform of a public benefit corporation (PBC). Our public benefit purpose is to provide a brighter future for patients through (a) the development of novel pharmaceutical therapies; and (b) technologies that expand the availability of transplantable organs. At the same time, we seek to provide our shareholders with chronicsuperior financial performance and life-threatening conditions. our communities with earth-sensitive energy utilization.fourthe following commercial therapies in the United States to treat pulmonary arterial hypertension (PAH): Remodulin® (treprostinil) Injection (Remodulin); Tyvaso®PAH: Tyvaso® (treprostinil) Inhalation Solution (Tyvaso)(Tyvaso), which includes the Tyvaso Inhalation System; Tyvaso DPI® (treprostinil) Inhalation Powder (Tyvaso DPI); Orenitram® Remodulin® (treprostinil) Injection (Remodulin); Orenitram® (treprostinil) Extended-Release Tablets (Orenitram)(Orenitram); and Adcirca®Adcirca® (tadalafil) Tablets (Adcirca)(Adcirca). WeTyvaso and Tyvaso DPI are also approved to treat pulmonary hypertension associated with interstitial lung disease (PH-ILD). In the United States, we market and sell an oncology product, in the United States, Unituxin®Unituxin® (dinutuximab) Injection (Unituxin)(Unituxin), which is approved for treatment of high-risk neuroblastoma.neuroblastoma, and the Remunity® Pump for Remodulin (Remunity). Outside the United States, our only significantwe generate revenues are derived from the sale of Tyvaso, Remodulin, which is approved in Europe and various other countries. Unituxin.also engaged inactively advancing a pipeline of research and development ofprojects that includes new indications, formulations, and delivery devices for our existing products, as well as new products to treat PAH and other conditions. Finally, we are engaged in early-stage research and development of a number of organ transplantation-related technologies. We generate revenues from sales of our five commercially approved products noted above. Remodulin was approved by the U.S. Food and Drug Administration (FDA) for subcutaneous and intravenous administration in 2002 and 2004, respectively, and has been sold commercially in the United States since 2002. Tyvaso and Adcirca were both approved by the FDA and launched commercially in the United States in 2009. Orenitram and Unituxin were approved by the FDA in 2013 and 2015, respectively. Our sales, marketing and other commercial staff supports the availability of our commercial products in the United States, and these efforts are supplemented by our contract distributors. Outside the United States, our contract distributors are primarily responsible for sales and marketing efforts. United Therapeutics was incorporated in Delaware in June 1996. Report)"United Therapeutics"“United Therapeutics” and to the "company"“company”, "we"“we”, "us"“us” or "our"“our” are to United Therapeutics Corporation and its subsidiaries.Product Mode of Delivery Indication Current Status Our Territory Tyvaso RemodulinInhaled solution via ultrasonic nebulizerPAH and PH-ILD Commercial sales in the U.S., Argentina, and Israel* Worldwide Tyvaso DPI Inhaled dry powder via pre-filled, single-use cartridges PAH and PH-ILD Commercial sales in the U.S. Worldwide Remodulin Continuous subcutaneous PAH PAHCommercial sales in the U.S., most of Europe**, Argentina, Brazil, Canada, Chile, China,Columbia, Israel, Japan, Mexico, Peru, South Korea, and VenezuelaWorldwide Remodulin Continuous intravenous PAH Commercial sales in the U.S., most of Europe**, Argentina, Canada, Columbia, Israel, Japan, Mexico, Peru, Saudi Arabia, and South Korea Taiwan and VenezuelaWorldwide
Remunity Pump for RemodulinRemodulinContinuous subcutaneous via pre‑filled and patient-filled cassettes
PAHContinuous intravenousCommercial sales in the U.S.
WorldwideOrenitram PAHOral
PAH
Commercial sales in the U.S.Worldwide Unituxin Intravenous High-risk neuroblastoma Commercial sales in the U.S., most of Europe*, Argentina, Canada, China, Israel,and Japan Mexico, Peru, Saudi Arabia, South Korea and Switzerland
Worldwide
AdcircaTyvasoOral
PAHInhaledPAH
Commercial sales in the U.S. and IsraelWorldwideUnited StatesAdcircaOralPAHCommercial in the U.S.United StatesOrenitramOralPAHCommercial in the U.S.WorldwideUnituxinIntravenousHigh-risk neuroblastomaCommercial in the U.S.Worldwide
the major European markets other than the United Kingdom.We have obtained approval for subcutaneous* Remodulin is marketed and intravenous Remodulin in 24 member countries of the European Economic Area (EEA), as well as other non-EEA countries in Europe, and have received pricing approvalsold in most of these countries.2022 Annual Report 3 Arterial HypertensionFDA-approved therapies approved by the FDA for PAH focus on three distinct molecular pathways: the prostacyclin pathway, the nitric oxide (NO) pathway, and the endothelin (ET) pathway. The classes of drugs that target these three pathways are:substancemolecule that relaxes the pulmonary blood vessels, prevents platelet aggregation, and inhibits the proliferation of smooth muscle cells in the pulmonary vessels. Therefore, drugsDrugs that mimic the action of prostacyclin, known as prostacyclin analogues, are established PAH treatments. Another class of therapy, called IP prostacyclin receptor agonists, has recently been developed to addressalso addresses PAH through the prostacyclin pathway. As compared with prostacyclin analogues, which broadly mimic the effect(PDE-5)(PDE-5) Inhibitors and Soluble Guanylate Cyclase (sGC)(sGC) Stimulators. Patients with PAH have also been shown to have reduced levels of the enzyme responsible for producing NO,nitric oxide, a naturally occurring substance in the body that causes relaxation of the pulmonary blood vessels. NONitric oxide produces this effect by increasing intracellular levels of cyclic guanosine monophosphate GMP (cyclic GMP)(cyclic GMP). Therefore, another established therapeutic approach has been to inhibit the degradation of cyclic GMP using drugs known as PDE-5 inhibitors. In addition, sGC is an enzyme found in the endothelial cells and the receptor for NO.nitric oxide. When NOnitric oxide binds to sGC, the enzyme enhances production of cyclic GMP. As a result, sGC stimulators are also approved to treat PAH.substancepeptide in the body that causes constriction of, and structural changes to, the pulmonary blood vessels. Therefore, another established therapeutic approach has been to block the action of endothelin with drugs that are known as endothelin receptor antagonists (ETRAs)(ERAs). Tyvaso and Orenitram are all formulations of treprostinil, a prostacyclin analogue, and Adcirca is a PDE-5 inhibitor. The clinical severity of PAHclassified accordingalso a rare condition, impacting at least 30,000 patients in the United States. Tyvaso and Tyvaso DPI are the only available therapies the FDA has approved to treat PH-ILD.system originally developed for heart failurenebulized product by the New York Heart AssociationFDA to treat PAH, and then modifiedwas launched commercially in the United States in 2009. Following the successful INCREASE phase 3 registration study of Tyvaso in patients with PH-ILD, including patients with underlying idiopathic pulmonary fibrosis (IPF) and combined pulmonary fibrosis and emphysema, the FDA approved our efficacy supplement to the Tyvaso new drug application (NDA) in March 2021. As a result, Tyvaso’s label was updated to include the PH-ILD indication. In May 2022, the FDA approved our dry powder formulation of inhaled treprostinil called Tyvaso DPI, for treatment of both PAH and PH-ILD. We developed this product under an in-license from MannKind Corporation (MannKind), and launched this product commercially in the United States in June 2022.4 United Therapeutics, a public benefit corporation World Health Organization (WHO)FDA as a drug-device combination product, consisting of Tyvaso drug product and the Tyvaso Inhalation System.patients with PAH, ranging from functional class I (no symptoms) through functional class IV (severe symptoms). Labeled indications for PAH therapies often note that clinical studies forcleaning and filling; and (2) mobile and more convenient, as the drug predominantly included patients in one or more functional classes. PAH is a subsetcompact design of the condition more broadly known as pulmonary hypertension. WHO has classified pulmonary hypertensioninhaler and drug cassettes used with Tyvaso DPI enables the device to easily fit into five groups, with PAH being designated WHO Group 1, which includes multiple etiologies such as idiopathic (meaning the causepatient’s pocket and the device does not require electricity to function.unknown) and heritable PAH, as well as PAH associated with connective tissue diseases. While our PAH therapies' labelingthe only other FDA-approved inhaled prostacyclin analogue that is limitedavailable on the market. Patients need to inhale Ventavis six to nine times per day via a nebulizer. According to its package insert, each Ventavis inhalation consists of four to ten minutes of continuous inhalation via the treatmentnebulizer. We completed an open-label study in the United States to investigate the clinical effects of WHO Group 1 PAH, we are engagedswitching patients from Ventavis to Tyvaso. Patients in research and development effortsthis study saved an average of approximately 1.4 hours per day when administering Tyvaso compared to expandVentavis.useeffectiveness of Orenitram to treat pulmonary hypertension in certain categories of WHO Group 2, and Tyvaso to treat pulmonary hypertensionPAH included predominately PAH patients with functional class III symptoms (patients who may not have symptoms at rest but whose activities are greatly limited by shortness of breath, fatigue, or near fainting). Tyvaso was generally well tolerated in these trials. The most common side effects were transient cough, headache, nausea, dizziness, and flushing. In January and June 2021, data from the INCREASE study of Tyvaso for PH-ILD were published in the New England Journal of Medicine and The Lancet Respiratory Medicine, respectively.categories of WHO Group 3.circumstances. For further details,detail, seeResearch the section below entitled Patents and Development below.
.approximately $670.9$500.2 million, $602.3$513.7 million, and $572.8$516.7 million in Remodulin net product sales, representing 3926 percent, 3831 percent, and 3935 percent of our total revenues for the years ended December 31, 2017, 20162022, 2021, and 2015,2020, respectively. Remodulin is indicated to treat patients with PAH to diminish symptoms associated with exercise. Studies establishing effectiveness included patients with functional class II-IV (moderate to severe) symptoms.approvedmarketed and sold for the treatment of PAH in 38 countries by continuous subcutaneous administration and in 35 countries by continuous intravenous administration, and is sold commercially inthroughout most of these countries. Applications for approval of both subcutaneousEurope, Canada, Mexico, and intravenous Remodulin are under reviewvarious countries throughout Asia, the Middle East, and South America, as noted in other countries.intravenously or 72 hours subcutaneously before refilling the external infusion pump, and is packaged as an aqueous solution so patients do not have to reconstitute the drug before refilling their pumps.pump. This profile contrasts favorably with the othernon-treprostinil based, continuously infused prostacyclin therapies inon the market—Flolan®FlolanVeletri®Veletri®, and generic epoprostenol.intravenously.2022 Annual Report 5 have settled patent litigation with four generic drug companies that filed abbreviated new drug applications (ANDAs) with the FDA to market generic versionsalso face competition from manufacturers of Remodulin in the United States. Under the terms of these settlements, Sandoz, Inc. (Sandoz) is permitted to launch its generic version of Remodulin in the United States in June 2018, and Teva Pharmaceuticals USA, Inc. (Teva), Par Sterile Products, LLC (Par) and Dr. Reddy's Laboratories, Inc. (Dr. Reddy's), are permitted to launch their generic versions of Remodulin in the United States in December 2018, although each of these companies may be permitted to enter the market earlier under certain circumstances. For further detail, seeand abroad. See the section below entitledPatents and Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights.adverse eventsside effects associated with Remodulin. For example, when infused subcutaneously, Remodulin causes varying degrees of infusion site pain and reaction (redness and swelling) in most patients. Patients who cannot tolerate the infusion site pain related to the use of subcutaneous Remodulin may instead use intravenous Remodulin. Intravenous Remodulin is delivered continuously through a surgically implanted central venous catheter, similar to Flolan, Veletri, and generic epoprostenol. Patients who receive therapy through implanted venous catheters have a risk of developing blood streambloodstream infections and a serious systemic infection known as sepsis. Other common side effects associated with both subcutaneous and intravenous Remodulin include headache, diarrhea, nausea, jaw pain, vasodilation, and edema.Tyvaso We sell Tyvaso As noted below under same specialty pharmaceutical distributorspump with less patient manipulation than is typically involved in filling other currently-available subcutaneous pumps. In November 2019, we entered into a supply agreement with an affiliate of DEKA to manufacture and supply the United States that distributeRemunity Pump to us. Under the terms of the agreement, we reimburse all of DEKA’s and its affiliates’ costs to manufacture the Remunity Pump.We recognized approximately $372.9 million, $404.6 millionIn September 2022, we launched a patient-filled version of the Remunity Pump, which enables patients to receive monthly shipments of empty, ready-to-fill Remunity cassettes and $470.1 million in Tyvaso net product sales, representing 22 percent, 25 percent and 32 percent of our total revenues for the years ended December 31, 2017, 2016 and 2015, respectively. Tyvaso is administered four times a day by inhaling up to nine breaths during each treatment session, which takes approximately three minutes. Tyvaso is required to be administered using our proprietary Tyvaso Inhalation System, which consists of an ultra-sonic nebulizer that provides a dose of Tyvaso on a breath-by-breath basis, and related accessories. A single ampule containing Tyvaso is emptied into the Tyvaso Inhalation System once per day, so the Tyvaso Inhalation System only needs to be cleaned once daily. Tyvaso is regulated by the FDA as a drug-device combination product, consisting of Tyvaso drug product and the Tyvaso Inhalation System. Ventavis® (iloprost) is the only other FDA-approved inhaled prostacyclin analogue. Patients need to inhale Ventavis six to nine times per day via a nebulizer. According to its package insert, each Ventavis inhalation consists of four to ten minutes of continuous inhalation via the nebulizer. We completed an open-label study in the United States to investigate the clinical effects of switching
Orenitrampatients from Ventavis to Tyvaso. Patients in this study saved an average of approximately 1.4 hours per day when administering Tyvaso compared to Ventavis. Studies establishing effectiveness included predominately patients with functional class III symptoms (may not have symptoms at rest but activities are greatly limited by shortness of breath, fatigue, or near fainting). Tyvaso was generally well tolerated in our trials. The most common adverse events were transient cough, headache, nausea, dizziness and flushing. Tyvaso is also approved in Israel, where we commenced commercial sales during the second quarter of 2015.OrenitramFDA approved, orally administeredFDA-approved, orally-administered prostacyclin analogue, and is the only oral PAH prostacyclin class therapy approved in the United States that is titratable to a maximum tolerated dose without a dose ceiling. We sell Orenitram to the same specialty pharmaceutical distributors in the United States that distribute RemodulinTyvaso, Tyvaso DPI, and Tyvaso.Remodulin. We recognized approximately $185.8$325.1 million, $157.2$306.1 million, and $118.4$293.1 million in Orenitram net product sales, representing 1117 percent, ten18 percent, and eight20 percent of our total revenues for the years ended December 31, 2017, 20162022, 2021, and 2015,2020, respectively. In 2013, the FDA approved Orenitram for treatment of PAH patients to improve exercise capacity. The primary study that supported efficacy of Orenitram was a 12-week monotherapy study in which PAH patients were not on any approved background PAH therapy. In August 2018, we announced that our clinical study of Orenitram called FREEDOM-EV had met its primary endpoint of delayed time to first clinical worsening event. In particular, the preliminary results showed that Orenitram, when taken with an oral PAH background therapy, decreased the risk of a clinical worsening event versus placebo by 25 percent (p=0.0391), driven by a 61 percent decrease in the risk of disease progression for patients taking Orenitram, when compared to placebo (p=0.0002). In October 2019, the FDA approved a supplement to the Orenitram NDA to update the product’s label to reflect the FREEDOM-EV results. As a result, Orenitram is indicated to delay disease progression and improve exercise capacity. Mortality rates were similar between Orenitram and placebo groups at the end of randomized treatment. However, in participants for whom data are available (89 percent), Orenitram was associated with a 37 percent decreased risk of mortality compared with placebo at study closure (p=0.0324). These mortality data are not reflected in the FDA-approved label because they include data accrued in the open-label extension study.6 United Therapeutics, a public benefit corporation (75(66 percent) or PAH associated with connective tissue disease (19(26 percent). The most common side effects observed in our clinical studies were headache, nausea, and diarrhea.(Actavis) relating(Actavis) related to its ANDA seeking FDA approval to market a generic version of Orenitram in the United States. Under the terms of this settlement, Actavis will be permitted tomay launch its generic version of Orenitram in the United States beginning in June 2027, although Actavis may be permitted to enter the market earlier under certain circumstances. In May 2022, we settled litigation with ANI Pharmaceuticals, Inc. (ANI) regarding its ANDA seeking FDA approval to market a generic version of Orenitram. Under the settlement agreement, ANI can market its generic version of Orenitram in the United States beginning in December 2027, although it may be permitted to enter the market earlier under certain circumstances.For further detail, see the section below entitledPatents and Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights.Cialis®Cialis®, which is marketed by Eli Lilly and Company (Lilly)(Lilly) for the treatment of erectile dysfunction. We acquired the commercial rights to Adcirca for the treatment of PAH in the United States from Lilly in 2008. We sell Adcirca at prices established by Lilly, which are at parity with Cialis pricing. We recognized approximately $419.7$41.3 million, $372.2$55.9 million, and $278.8$67.3 million in Adcirca net product sales, representing 24two percent, 23three percent, and 19four percent of our total revenues for the years ended December 31, 2017, 20162022, 2021, and 2015,2020, respectively. the treatment of PAH. Adcirca is indicated to improve exercise ability in patients with PAH. Studies establishing effectiveness included predominately patients with functional class II-III symptoms. Headaches were the most commonly reported side effect. Prior to the approval of Adcirca, Revatio®, which is marketed by Pfizer Inc. (Pfizer), was the only PDE-5 inhibitor approved for the treatment of PAH. Sildenafil citrate, the active ingredient in Revatio, is also the active ingredient in Viagra®, which is marketed by Pfizer for the treatment of erectile dysfunction. 2012, several companies launched generic formulations of sildenafil citrate. Revatio and generic sildenafil citrate are dosed three times daily. In September 2014, Gilead Sciences, Inc. (Gilead)August 2018, Mylan N.V. announced the results of a study of ambrisentan (an ETRA) and tadalafil in PAH patients as a first-line combination treatment, compared to treating PAH patients with only ambrisentan or tadalafil. In the study, first-line treatment with both therapies reduced the risk of clinical failure (a composite endpoint that incorporates clinical worsening events—death, hospitalization and disease worsening—and a component of unsatisfactory long-term clinical response) compared to a monotherapy treatment by 50 percent. Based on these results, in October 2015, the FDA approved an update to the new drug application (NDA) for Letairis® (ambrisentan), permitting the use of Letairis in combination with tadalafil for PAH to reduce the risks of disease progression and hospitalization for worsening PAH, and to improve exercise ability. A U.S. patent for Adcirca for the treatment of pulmonary hypertension expired in November 2017. Lilly has two additional patents expiring in April and November 2020, respectively, covering Adcirca and claiming pharmaceutical compositions and free drug particulate forms (the 2020 Patents). The Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) has issued a Final Written Decision finding these patents invalid as the result of aninter partes review (IPR) proceeding initiated by Actelion Pharmaceuticals Ltd. Lilly's appeal of the PTAB's decision is pending before the United States Court of Appeals for the Federal Circuit. In May 2017, we amended our license agreement with Lilly relating to Adcirca to clarify and extend the term of the agreement and to amend the economic terms of the agreement following the expiration of a patent covering Adcirca in November 2017. As a result of this amendment, beginning December 1, 2017, our royalty rate on net product sales of Adcirca increased from five percent to ten percent, and we are required to make milestone payments to Lilly equal to $325,000 for each $1,000,000 in net product sales. Adcirca's cost of product sales as a percentage of Adcirca's net product sales has increased significantly since December 1, 2017 due to these cost increases. In the event that Lilly prevails in one or both of the appeals noted above: (a) the previous five percent royalty rate will apply and the effective date of the new payment structure will be deferred until the expiration, lapse, abandonment or invalidation of the last claim of the 2020 Patents covering commercialization of Adcirca for pulmonary hypertension; and (b) to the extent we had previously paid amounts in excess of five percent, those amounts will be refunded by Lilly. The FDA has already tentatively approved ANDAs filed by at least two generic companies to market generic versions of Adcirca following the expiration of the November 2017 patent. However, the FDA granted Lilly's request for pediatric exclusivity, which provides an additional six-month exclusivity period through May 2018. As a result, following the expiration of regulatory exclusivity in May 2018, we anticipate the launch of its generic versionsversion of Adcirca, resultingwhich resulted in decreased Adcirca sales, which will likely lead to a material adverse impact on Adcirca revenue. Asnet product sales. Additional companies launched generic versions of Adcirca in February 2019. In June 2020, we amended the term of our Adcirca license agreement with Lilly expires on the latest to occur of: (1) expiration, lapse, cancellation, abandonment or invalidation of the last claim to expire within a Lilly patent covering the commercialization of Adcirca for the treatment of pulmonary hypertension in the United States; (2) expiration of any government-conferred exclusivity rights to use Adcirca for the treatment of pulmonary hypertension in the United States; or (3)extend its term through December 31, 2020.(BLA)(BLA) for Unituxin, in combination with granulocyte-macrophage colony-stimulating factor, (GM-CSF), interleukin-2, (IL-2), and 13-cis-retinoic acid, (RA), for the treatment of patients with high-risk neuroblastoma (a rare form of pediatric cancer) who achieve at least a partial response to prior first-line multiagent, multimodality therapy. Unituxin is a chimeric monoclonal antibody composed of a combination of mouse and human DNA monoclonal antibody that induces antibody-dependent cell-mediated cytotoxicity, a mechanism of cell-mediated immunity whereby the immune system actively targets a cell that has been bound by specific antibodies. Unituxin therapy is associated with severe side effects, including infections, infusion reactions, hypokalemia, hypotension, pain, fever, and capillary leak syndrome. We commenced U.S. In November 2018, we received approval from Health Canada to market Unituxin, and we launched commercial sales of the product in Canada in late 2019. In June 2021, our Japanese distributor obtained approval to market Unituxin in the third quarter of 2015. Japan, and launched commercial sales shortly thereafter.approximately $76.0$182.9 million, $62.5$202.3 million, and $20.5$122.9 million in Unituxin net product sales, representing fournine percent, four12 percent, and oneeight percent of our total revenues for the years ended December 31, 2017, 20162022, 2021, and 2015,2020, respectively.2022 Annual Report 7 most of our research and development efforts on the following near-term pipeline programs (intended to result in product launches in the 2018-2021 timeframe) and medium-term pipeline programs (intended to result in product launches in the 2022-2025 timeframe).programs. We are also engagedengage in a variety of additional medium- and long-term research and development efforts, including technologies designed to increase the supply of transplantable organs and tissues and improve outcomes for transplant recipients through regenerative medicine, 3-D organ bioprinting, xenotransplantation, biomechanical lungs and ex-vivoex vivo lung perfusion.Near-Term (2018-2021)ProductMode of DeliveryIndicationCurrent StatusSTUDY NAMEOur TerritoryImplantable System forRemodulinContinuous intravenous via implantable pumpPAHPending regulatoryapprovalUnited States, United Kingdom, Canada, France, Germany, Italy and JapanRemUnity™ (treprostinil)Continuous subcutaneous via pre-filled, semi-disposable systemPAHPre-NDAWorldwideOreniPlus™ (Orenitram incombination with approved background therapy)OralPAH (decrease morbidity and mortality)Phase IVFREEDOM-EVWorldwideTysuberprost™ (esuberaprost incombination with Tyvaso)Oral (esuberaprost) Inhaled (Tyvaso)PAH (decrease morbidity and mortality)Phase IIIBEATNorth America, Europe, Mexico, South America, Egypt, India, Israel, South Africa and AustraliaRemoPro™ (pain-freesubcutaneous Remodulin prodrug)Continuous subcutaneousPAHPre-ClinicalWorldwideDinutuximabIntravenousSmall cell lung cancerPhase II/IIIDISTINCTWorldwideTyvaso-ILD™ (treprostinil)InhaledPulmonary hypertension associated with idiopathic pulmonary fibrosis (WHO Group 3)Phase IIIINCREASEWorldwideMedium-Term Pipeline Programs (2022-2025)Product Mode of Delivery Indication Current Status
STUDY NAMEOur Territory Tyvaso (treprostinil)InhaledPulmonary hypertension associated with chronic obstructive pulmonary disease (WHO Group 3)Phase IIIPERFECTWorldwideAurora-GT™ (eNOS genetherapy)RemoPro™
(subcutaneous prodrug)
Continuous subcutaneousIntravenousPAH
Phase 1PAHWorldwidePhase II/IIISAPPHIREUnited StatesOreniLeft™
Tyvaso (treprostinil)
InhaledOralIPFPulmonary hypertension associated with left ventricular diastolic dysfunction (WHO Group 2)WorldwideRalinepag
(IP receptor agonist)
OralPAH IIISOUTHPAW3 ADVANCE studies
Worldwide, subject to out-licenses granted in certain Asian countriesWorldwideImplantable System for Remodulinworking with Medtronic, Inc. (Medtronic) onconducting a program to develop Medtronic's proprietary intravascular infusion catheter to be used with its SynchroMed® II implantable infusion pump and related infusion system components (together referred to as the Implantable System for Remodulin) in order to deliver Remodulin for the treatmentseries of PAH. The SynchroMed II device is already approved for delivery of medication to treat neuropathic pain. With our funding, Medtronic completed the DelIVery clinical trial, which studied the safety of the Implantable System for Remodulin. The primary objective was to demonstrate a rate of catheter-related complications below 2.5 per 1,000 patient-days while using the Implantable System for Remodulin. In 2013, Medtronic informed us that this primary objective was met. If the Implantable System for Remodulin is approved, the technology has the potential to reduce many of the patient burdens and other complications associated with the use of external pumps to administer prostacyclin analogues. In order to launch the Implantable System for Remodulin in the United States, we are pursuing parallel regulatory filings with Medtronic relating to the device and the drug, respectively. Medtronic's premarket approval application (PMA) for the device was approved by the FDA in December 2017. We resubmitted our NDA for the use of Remodulin in the implantable pump on January 30, 2018, and we anticipate a two-month review period. Medtronic is entirely responsible for regulatory approvals and all manufacturing and quality systems related to its infusion pump and related components. Medtronic entered into a consent decree citing violations of the quality system regulation for medical devices and requiring it to stop manufacturing, designing and distributing SynchroMed II implantable infusion pump systems, except in limited circumstances, until the FDA determines that Medtronic has met all the provisions listed in the consent decree. During the fourth quarter of 2017, Medtronic was notified by the FDA that these provisions have been satisfied, and Medtronic has therefore been permitted to recommence manufacture and sale of the systems without limitation, but certain other elements of the consent decree remain in effect, such as the requirements to comply with a remediation plan and to submit to periodic auditing of Medtronic's quality systems. Although we believe we will be permitted to launchthe Implantable System for Remodulin following FDA approval, any non-compliance by Medtronic with its consent decree could interrupt its manufacture and sale of the device.RemUnity and RemoPro In December 2014, we entered into an exclusive agreement with DEKA Research & Development Corp. (DEKA)phase 1 studies to develop a pre-filled, semi-disposable system for subcutaneous delivery of treprostinil, which we call the RemUnity system. Under the terms of the agreement, we are funding the development costs related to the RemUnity system and will pay product fees and a single-digit royalty to DEKA based on commercial sales of the system and the treprostinil drug product sold for use with the system. The RemUnity system consists of a small, lightweight, durable pump that is intended to have a service life of at least three years. The RemUnity system uses disposable cartridges pre-filled with treprostinil, which can be connected to the pump with less patient manipulation than is typically involved in filling currently-available subcutaneous pumps. Currently, we are engaged in engineering, design and development efforts to optimize the RemUnity system to deliver treprostinil in pre-filled reservoirs, and intend to complete human factor studies and functionality testing in subjects before submitting an application to the FDA to approve the pre-filled RemUnity system. We are also engaged in pre-clinical development of a new prodrug of treprostinil called RemoPro, which is intended to enable subcutaneous delivery of treprostinil analog therapy without the site pain currently associated with subcutaneous Remodulin. AAs a prodrug, is a metabolically inactive compound that, after administration, metabolizes into an active compound. RemoPro is intendeddesigned to be inactive in the subcutaneous tissue, which shouldis intended to decrease or eliminate site pain. Once RemoPropain, and to metabolize into treprostinil or a treprostinil analog once it is absorbed into the blood, it metabolizes into treprostinil.Orenitram, OreniPlus blood. OreniLeft In 2013, the FDA approved OrenitramPAH patients to improve exercise capacity. The primary study that supported efficacy of Orenitram was a 12-week monotherapy study (FREEDOM-M) in which PAH patients were not on any approved background PAH therapy. In order for Orenitram to reach its full commercial potential, we believe we need to complete successfully further studies to support an amendment to Orenitram's label to indicate that Orenitram delays morbidity and/or mortality (also known as "time to clinical worsening") in PAH patients who are on an approved oral background therapy. We refer to this initiative to amend Orenitram's label as OreniPlus. As such, we are conducting a phase IV registration study calledFREEDOM-EV, which is intended to support such a label amendment if successful. Enrollment of this study was completed in December 2017, and we anticipate full results of the study will be available during the second half of 2018. We are also enrolling patients in a study of Orenitram (SOUTHPAW) to treat WHO Group 2 pulmonary hypertension (specifically associated with left ventricular diastolic dysfunction), which we refer to as OreniLeft. There are presently no FDA approved therapies indicated for treatment of WHO Group 2 pulmonary hypertension.Tysuberprost In 2012, we completed a phase I safety study of esuberaprost, a single-isomer orally bioavailable prostacyclin analogue, and the data suggested that dosing esuberaprost four times a day was tolerable. We believe that esuberaprost and treprostinil have differing prostacyclin receptor-binding profiles and are studying the potential safety and efficacy benefits for patients when used in combination. We also believe that inhaled treprostinil and oral esuberaprost have complementary pharmacokinetic and pharmacodynamic profiles, which indicate that they should provide greater efficacy in combination. In March 2017, we completed enrollment of our phase III registration study calledBEAT (BEraprost 314dAdd-on toTyvaso) to evaluate the clinical benefit and safety of esuberaprost in combination with Tyvaso for patients with PAH who show signs of deterioration on Tyvaso or have a less than optimal response to Tyvaso treatment. We refer to the resulting use of esuberaprost and Tyvaso therapies in combination with each other as Tysuberprost.Unituxin Under our BLA approval for Unituxin, the FDA has imposed certain post-marketing requirements and post-marketing commitments on us. We are conducting additional clinical and non-clinical studies to satisfy these requirements and commitments. While we believe we will be able to complete these studies, any failure to satisfy these requirements or commitments could result in penalties, including fines or withdrawal of Unituxin from the market, unless we are able to demonstrate good cause for the failure. In addition, we are conducting studies of Unituxin in adult patients with other forms of GD2-expressing cancers. We are currently enrolling the phase III portion of a phase II/III study calledDISTINCT, in patients with small cell lung cancer. During the fourth quarter of 2017, we completed the phase II portion of the study, and commenced the phase III portion of the study following an interim safety review. These research and development efforts into new indications for Unituxin have been substantially outsourced to a contract research organization called Precision Oncology, LLC. Unituxin therapy is associated with severe side effects, including infections, infusion reactions, hypokalemia, hypotension, pain, fever, and capillary leak syndrome. In post-approval use of Unituxin, the adverse reactions of prolonged urinary retention, transverse myelitis, and reversible posterior leukoencephalopathy syndrome have been observed. Unituxin's label also includes a boxed warning related to serious infusion reactions and neurotoxicity. Finally, we are developing a fully humanized (non-chimeric) version of dinutuximab, the active ingredient in Unituxin. This new version is expected to reduce some of the side effects associated with Unituxin, which is a chimeric composed of a combination of mouse and human proteins.Tyvaso and Tyvaso-ILD In October 2017, we received FDA approval of a supplement to our NDA for Tyvaso, covering a new inhalation device as part of the Tyvaso Inhalation System. The new device, called the TD-300/A, was designed based on physician and prescriber feedback, and is intended to aid patient compliance and enhance ease of use. We plan to launch the TD-300/A in 2018, which we believe will help reduce the rate of Tyvaso discontinuation associated with the current device. In addition to the TD-300/A, we are engaged in research and development efforts into new devices to further optimize the delivery of inhaled treprostinil. We are enrolling a phase III registration study calledINCREASE, which is a study of Tyvaso in patients with WHO Group 3 pulmonary hypertension associated with interstitial lung disease (specifically associated with idiopathic pulmonary fibrosis or combined pulmonary fibrosis and emphysema), which we refer to as Tyvaso-ILD. We are also planning a phase III registration study calledPERFECT (Pulmonary hypertensionEnRichment studyFor theEvaluation ofCOPD withTyvaso), which is a study of Tyvaso in patients with WHO Group 3 pulmonary hypertension associated with chronic obstructive pulmonary disease. There are presently no FDA approved therapies indicated for treatment of WHO Group 3 pulmonary hypertension.Aurora-GT We are enrolling a phase II/III study (calledSAPPHIRE) of a gene therapy product called Aurora-GT, in which a PAH patient's own endothelial progenitor cells are isolated, transfected with thegene for human endothelial NO-synthase (eNOS), expanded ex-vivo and then delivered to the same patient. This product is intended to rebuild the blood vessels in the lungs that are destroyed by PAH. This studyIPF. entirely in Canada, and is sponsored by Northern Therapeutics, Inc., a Canadian entity in which we have a 49.7 percent voting stake and a 71.8 percent financial stake. We have the exclusive right to pursue this technology in the United States and Canada, and TETON 2 is being conducted outside the United States and Canada. The primary endpoint of both studies is the change in absolute forced vital capacity (FVC) from baseline to week 52. The TETON 1 study enrolled its first patient in June 2021, and the TETON 2 study enrolled its first patient in October 2022.Aurora-GT ifSAPPHIREPAH. We are enrolling two phase 3 studies of ralinepag: (1) ADVANCE OUTCOMES, which is successful.
ADVANCE CAPACITY, studying the effect of ralinepag on exercise capacity in PAH patients with a primary endpoint of change in peak oxygen uptake via cardiopulmonary exercise test.Both of these studies are global, multi-center, placebo-controlled trials of patients on approved oral background PAH therapies.8 United Therapeutics, a public benefit corporation end stageend-stage organ failure kills millions of people. A significant number of these patients could have benefited from an organ transplant. Unfortunately, the number of usable, donated organs available for transplantation has not grown significantly over the past half century while the need has soared. Our long-term goals are aimed at addressing this shortage. With advances in technology, we believe that creating an unlimited supply of tolerable manufactured organs is now principally an engineering challenge, and we are dedicated to finding engineering solutions. Since 2011, we have beenWe are engaged in research and development of a variety of technologies designed to increase the supply of transplantable organs and tissues and to improve outcomes for transplant recipients. These programs include preclinical research and development of alternative tissue sourcesrecipients through tissue and organ xenotransplantation, regenerative medicine, biomechanical lungs,3-D organ bioprinting, xenotransplantation, and other technologiesex vivo lung perfusion.create engineered organsdevelop a pilot-scale, designated pathogen-free facility to house genetically-modified pigs, with a goal of commencing human clinical trials of xenotransplanted kidneys we call UKidneys™ from pigs to humans in the near term. In August 2020, UAB began to conduct operations at the facility with the first introduction of genetically modified pigs, and organ tissues. Although our primary focus is on engineered lungs, we arein March 2021, the facility received its recertification of compliance from the American Association for Accreditation of Laboratory Animal Care. We also developing technology for other engineered organs, such as kidneyshave sponsored research agreements with Johns Hopkins University, New York University (NYU), and hearts, and our manufactured lungs, kidneys and hearts have set records for viability in FDA-required animal models. Most recently, in February 2018 we reached a significant milestone by achieving 30-day survivalUniversity of Maryland Baltimore to conduct preclinical testing of our genetically modified porcine lungs in FDA-required animal models. We are also developing technologies to improve outcomes for lung transplant recipientsxenografts, which have been generating data regarding our UKidneys, UThymoKidneys™, and to increase the supply of donor lungs through ex-vivo lung perfusion. UHearts™.the ultimate technologya complementary solution for a broad array of diseases, many of which (such as PAH) have proven incurable thus farto date through more traditional pharmaceutical and biologic therapies. For this reason, in 2015 we created a wholly-owned public benefit corporationPBC called Lung Biotechnology PBC, chartered with the express purpose "to addressof “address[ing] the acute national shortage of transplantable lungs and other organs with a variety of technologies that either delay the need for such organs or expand the supply."
” It is also why we included the development of “technologies that expand the availability of transplantable organs” as part of our express public benefit purpose when we converted United Therapeutics to a PBC in 2021.ResearchDevelopment Expendituresincurred substantialthe exclusive right to pursue this technology in the United States. Under our agreement with Northern Therapeutics, we funded all of the expenses of the SAPPHIRE program through the end of 2022; thereafter, Northern Therapeutics is solely responsible for our research and development activities and expect to continue to do so in connection withall future costs of developing Aurora-GT outside the programs described above. For details regarding our research and development expenses, seePart II—Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview—Research and Development. During the years ended December 2017, 2016 and 2015, we incurred $264.6 million, $147.6 million and $245.1 million in research and development expenses.2022 Annual Report 9 During the second half of 2016, we consolidated and restructured our domestic sales force into a unified team that sells all of our PAH products, in order to better educate physicians about how our products can be used to create a "continuum of care" for treating patients across all stages of thedisease. Previously, our sales and marketing personnel were divided into two teams that sold different PAH products.Tyvaso,Remunity Pump, Orenitram, and UnituxinTyvasothe Remunity Pump, and Orenitram throughout the United States through two contracted specialty pharmaceutical distributors: Accredo Health Group, Inc. and its affiliates including Curascript SD(Accredo) and Caremark, L.L.C. (CVS Specialty Distribution (collectively Accredo), and CVS Caremark (Caremark)). TheseThese distributors are required to maintain certain minimum inventory levels in order to ensure an uninterrupted supply to patients who are prescribed our therapies. We compensate Accredo and CaremarkCVS Specialty on a fee-for-service basis for certain ancillary services in connection with the distribution of these products. If any of our distribution agreements expire or terminate, we may, under certain circumstances, be required to repurchase any unsold Remodulin, Tyvaso or Orenitram inventory held by our distributors.CaremarkCVS Specialty assist us with the administration of these programs.(ASD)(ASD), an affiliate of AmerisourceBergen Corporation. Under this agreement, we sell Unituxin to ASD at a transfer price that we establish, and we pay ASD fees for services provided in connection with the distribution and support of Unituxin. (seePatents and Other Proprietary Rights, Strategic Licenses and Market Exclusivity—Agreements with Lilly Related to Adcirca below for more details), Lilly manufactures and distributes Adcirca on our behalf through Lilly'sits wholesaler network which includes Accredo and Caremark, in the same manner that it distributes its own pharmaceutical products. Under the terms of this agreement, we take title to Adcirca upon completion of its manufacture by Lilly. Adcirca is shipped to customers in accordance with purchase orders received by Lilly. Upon shipment, Lilly sends an invoice and collects the amount due from the customer subject to customary discounts and rebates, if any. Although Lilly provides these services on our behalf, we maintain the risk of loss as it pertains to inventory, product returns, and non-payment of invoices. The manufacturing and supply agreement will continue in effect until the December 31, 2023 expiration or earlier termination of our license agreement for Adcirca. Lilly retains authority under the license agreement for all regulatory activities with respect to Adcirca, as well as its retail pricing, which has been and is expected to remain at price parity with Cialis. Since receiving FDA approval of Adcirca, Lilly has generally increased the net wholesale price of Adcirca two or three times each year by approximately nine to ten percent each time. We have also established a patient assistance program in the United States, which provides Adcirca to eligible uninsured or under-insured patients at no charge.TyvasoIsrael and the Middle East, Asia, and South and Central America. Our primary distributor outside the United States is Grupo Ferrer Internacional, S.A. (Ferrer), which holds Remodulin marketing authorization rights in many of these territories. We also sell nebulized Tyvaso commercially to a distributordistributors that hashave exclusive distribution rights in Argentina and Israel. We also plan to sell nebulized Tyvaso through an exclusive distributor in Japan, where the product was approved in late 2022. We also distribute Remodulin and Unituxin in Canada through a specialty pharmaceutical wholesaler. In some of the European markets where we are not licensed to market Remodulin, such as SpainTaiwan, Turkey, and the United Kingdom, we sell (but doRemodulin is available, but not market) Remodulinmarketed, on a named-patientnamed patient basis in which therapies are approved for individual patients by a national medical review board, hospital, or health plan on a case-by-case basis. WeSimilar named-patient programs are also maintain similar named patient programsavailable for Tyvaso in certain countries.10 United Therapeutics, a public benefit corporation Tyvaso and Orenitram Proprietary Rights Tyvaso and Orenitram. We have been granted threetwo unexpired patents relatingrelated to manufacturingthe manufacture of treprostinil that expire in 2028 and are listed in the FDA'sFDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book (see Orange Book below), for Tyvaso, Tyvaso DPI, Remodulin, Tyvaso and Orenitram. OneBoth of these patents has been held invalid byare subject to the PTAB following an IPR proceeding, asproceedings discussed below underGeneric Competition and Challenges to our Intellectual Property Rights.Remodulin. been granted three U.S. patents covering an improved diluent for Remodulin, which expire in 2028 and 2029. We have another patent covering intravenous administration of Remodulin with certain diluents, which expires in 2024. All four of these patents are listed in the Orange Book.•Tyvaso.We have been granted two U.S. patents, as well as patents in other countries, for Tyvaso that cover methods of treating PAH by inhaled delivery. These patents will expire in the United States in 2018 and in various countries throughout the world in 2020. We have also been granted two patents directed to a method of treating pulmonary hypertension and a kit for treating pulmonary hypertension. These two patents expire in 2028 and are listed in the Orange Book. Counterparts to these two patents are issued in several other countries. BothWe have also been granted two patents on methods of treating pulmonary hypertension by administering treprostinil by inhalation, which expire in 2024. These two patents are subjectalso listed in the Orange Book.ongoing IPR proceeding, as discussed below under Generic Competitionimproved diluent for Remodulin, which expire in 2028 and 2029. We have another patent covering intravenous administration of Remodulin with certain diluents, which expires in 2024. We have been granted two patents covering a treprostinil formulation with a citrate buffer, which expire in 2024. We have been granted another patent covering a method of treating pulmonary hypertension by administering treprostinil at a certain rate intravenously, which expires in 2024. All seven of these patents are listed in the Orange Book.•Orenitram.(Supernus)(Supernus). These patents will expire in the United States between 2024 and 2031 and in various countries throughout the world between 2024 and 2030.relatingrelated to Tyvaso, Tyvaso DPI, Remodulin, Tyvaso and Orenitram.2022 Annual Report 11 applicant'sapplicant’s product or a method of using the product. Each of the patents submitted is then published in the Orange Book. SeeGovernmental Regulation—Patent Term and Regulatory Exclusivity below for further details. Remodulin currently has sevennine unexpired Orange Book-listed patents with expiration dates ranging from 2024 to 2029. Tyvaso currently has eightsix unexpired Orange Book listedBook-listed patents expiring in 2028. Tyvaso DPI currently has six unexpired Orange Book-listed patents with expiration dates ranging from 20182025 to 2028.2035. Orenitram currently has thirteentwelve unexpired Orange Book listed patents with expiration dates ranging from 2024 to 2031. Additional patent applications are pending, and if granted, may be eligible for listing in the Orange Book. Remodulin's regulatory exclusivity in the United StatesEurope has expired. Tyvaso DPI.In 2010, the FDA granted orphan drug designation for Tyvaso, which resulted in an orphan exclusivity period that expired in July 2016. In 2004,March 2021, the EMAFDA granted Tyvaso three-year clinical trial exclusivity for PH-ILD as a result of the INCREASE study and the expansion of the Tyvaso label to include a PH-ILD indication. This exclusivity period will extend through March 2024, and also covers Tyvaso DPI for PH-ILD. In 2004, the European Commission designated Tyvaso an orphan medicinal product for the treatment of both PAH and chronic thromboembolic pulmonary hypertension, which would confer a ten-year exclusivity period commencing if and when we obtain marketing approval. AsIn December 2020, the FDA granted orphan designation for treprostinil for treatment of IPF. Thus, if our TETON studies are successful and the FDA approves a result ofsupplemental NDA to update the Tyvaso and/or Tyvaso DPI labeling to include an IPF indication, the FDA approval of our NDA for Orenitram as a new dosage form, Orenitram had three years of marketshould grant seven-year orphan drug exclusivity for PAH, which expired in December 2016. A request forthis new indication. The EMA has also granted orphan drug designation for Orenitram was denied by the FDA, and we are currently challenging that denialtreprostinil to treat IPF. litigation pending before the United States District Courtand Europe has expired.District of Columbia.ThisThe term of this royalty will be paid for approximately twelve years commencing with the first product sale, which occurred inexpires during the second quarter of 2014.Teva, Par and Dr. Reddy's, relating to their ANDAs seeking FDA approval to market generic versions of Remodulin before the expiration of certain of our U.S. patents. Under the terms of our settlement agreements, Inc. (Sandoz can market its generic version of Remodulin in the United States beginning in June 2018, and Teva, Par and Dr. Reddy's can each launch their generic versions in the United States beginning in December 2018, although each of these companies may be permitted to enter the market earlier under certain circumstances. We also settled litigation with Actavis relating) related to its ANDA seeking FDA approval to market a generic version of Remodulin and in March 2019, Sandoz announced the availability of its generic product in the United States. We have also entered into similar settlement agreements with other generic companies, some of which have also launched sales of generic versions of Remodulin. Through December 31, 2022, we have seen limited erosion of Remodulin sales as a result of generic treprostinil competition in the United States. We are currently engaged in litigation with Sandoz and its marketing partner, RareGen (now a subsidiary of Liquidia Corporation, the parent company of Liquidia Technologies, Inc. (Liquidia)), related to the infusion devices used to deliver Remodulin subcutaneously. We understand that generic treprostinil was initially launched by Sandoz/RareGen for use only by intravenous administration. In May 2021, Sandoz/Liquidia Corporation announced that Sandoz’s generic treprostinil has been made available for subcutaneous use, following FDA clearance of a cartridge that can deliver the product via the Smiths Medical CADD MS-3 pump. See Note 14—Litigation, to our consolidated financial statements included in this Report.terms of this settlement agreement,agreements, Watson and Actavis can market itstheir generic versionversions of Remodulinnebulized Tyvaso and Orenitram in the United States beginning in January 2026 and June 2027, respectively, although Actavisthey may be permitted to enter the market earlier under certain circumstances. We are engaged in In May 2022, we settled litigation with Watson Laboratories, Inc. (Watson), based onANI regarding its ANDA seeking to market a generic version of Tyvaso before the expiration of certain of our U.S. patents at various dates from November 2018 through December 2028. In addition, Watson filed IPR petitions seeking to invalidate the claims of two of our patents that expire in 2028 and relate to Tyvaso, and on January 11, 2018, the PTAB issued decisions to institute IPR proceedings with respect to both patents. Finally, SteadyMed Ltd. (SteadyMed) filed an IPR petition seeking to invalidate the claims of one of our patents that expires in December 2028 and relates to treprostinil (U.S. Patent No. 8,497,393, which we refer to as the '393 patent), which is the active ingredient in Remodulin, Tyvaso and Orenitram. In March 2017, the PTAB issued a Final Written Decision in this matter, finding that all claims of the '393 patent are not patentable. In May 2017, we appealed this decision to the U.S. Court of Appeals for the Federal Circuit, and the Federal Circuit affirmed the PTAB's Final Written Decision. In February 2018, we submitted a petition for certiorari with the United States Supreme Court to review the Federal Circuit decision. The '393 patent remains valid and enforceable until all appeals have been exhausted. We are currently asserting the '393 patent (along with several other patents) against Watson in connection with its efforts to obtainFDA approval to market a generic version of Tyvaso. In January 2016, SteadyMed announced thatOrenitram. Under the FDA had granted orphan drug designation for Trevyent®, which is a single-use, pre-filled pump intended to deliver a two-day supplysettlement agreements, ANI can market its generic version of treprostinil subcutaneously using SteadyMed's PatchPump® technology. In June 2017, SteadyMed submitted an NDA to the FDA seeking approval of Trevyent for the treatment of PAH. In August 2017, SteadyMed announced receipt of a refuse-to-file letter from the FDA, in which the FDA refused to accept SteadyMed's NDA for review, requested further information on certain device specifications and required performance testing and additional design verification and validation testing on the final, to-be-marketed Trevyent product. SteadyMed has indicated it plans to resubmit its NDA by the end of 2018. We intend to continue vigorously defending the '393 patent, but even if the ultimate result is unfavorable to us, we have other patents covering subject matters similar to the '393 patent and with the same expiration date (December 2028). Specifically, in March 2017, the USPTO awarded us two additional patents related to the '393 patent, U.S. Patent Nos. 9,593,066 and 9,604,901. We prosecuted the applications that resulted in these new patents in parallel with the '393 patent IPR proceedings and presented claims addressing the invalidity arguments raised by SteadyMed in the '393 patent IPR proceedings and by Watson in our ongoing litigation. The USPTO allowed the new patent claims withfull knowledge of the '393 patent IPR proceedings, the invalidity arguments presented therein, and the invalidity arguments raised by Watson in connection with the '393 patent. Thus, we anticipate that these new patents should be less susceptible to challenge than the '393 patent. We have listed both of these new patents in the Orange Book for Remodulin, Tyvaso and Orenitram and may in the future decide to assert these patents against any competitor marketing or seeking approval to market generic versions of Remodulin, Tyvaso or Orenitram. Following the Final Written Decision in the '393 patent IPR, SteadyMed asked the PTAB to invalidate the new patents because SteadyMed claimed that the new patents' claims are patentably indistinct from the '393 patent claims. The PTAB denied SteadyMed's request. Thus, SteadyMed must petition the PTAB to request new IPR proceedings if it wishes to attempt to invalidate the patents issued in March 2017. SteadyMed also asked the PTAB to assert jurisdiction over additional new patent applications we filed related to the '393 patent that are pending before the USPTO and hold that the claims are patentably indistinct over the claims of the '393 patent. The PTAB denied SteadyMed's request. As a result, the USPTO could potentially award us additional patents based on these applications. For further details regarding the Watson, Actavis and SteadyMed matters, please see Note 16—Litigation, to our consolidated financial statements. As a result of our settlements with Sandoz, Teva, Par and Dr. Reddy's, we expect to see generic competition for Remodulin from these companies in the United States beginning in June 2018 (Sandoz) and December 2018 (Teva, Par and Dr. Reddy's) (or2027, although it may be permitted to enter the market earlier under certain circumstances). The two patents granted in March 2017 will not impact circumstances. Competition from12 United Therapeutics, a public benefit corporation settlements allowing generic competition for Remodulin. This increased competitioncompanies could reduce our net product sales and profits. See Note 14—Litigation, to our consolidated financial statements included in this Report.addition, whileDecember 2021, we filed a stipulation that the ’901 patent would not be infringed by Liquidia based on the court’s claim construction ruling. Trial was held during March 2022 on the ’066 patent and the ’793 patent, and we received the court’s decision in August 2022. The court found that Liquidia’s product would infringe the ’793 patent and that Liquidia had not proved that any claim of that patent is invalid. The court also determined that Liquidia had proved that certain claims of the ’066 patent were invalid and that we had not proved Liquidia’s infringement of another ’066 patent claim. Accordingly, the court issued a final judgment that bars the FDA from approving Liquidia’s approved product until expiration of the ’793 patent in May 2027. The parties have each appealed portions of the decision adverse to them, and those appeals are pending.relatingrelated to our products, there can be no assurance thatproducts. However, we willmay not prevail in defending our patent rights, or thatand additional challenges from other ANDA filers or other challengers will notmay surface with respect to our products. Our patents could be invalidated, found unenforceable, or found not to cover one or more generic forms of Remodulin, Tyvaso or Orenitram.our products. If any ANDA filer or filer of a 505(b)(2) NDA for a branded treprostinil product were to receive approval to sell a generic version of Remodulin, Tyvaso or Orenitramits treprostinil product and/or prevail in any patent litigation, theour affected product(s) would become subject to increased competition, which could reduce our net product sales and profits. The U.S. patent for Adcirca for the treatment of pulmonary hypertension expired in November 2017. The FDA has granted additional regulatory exclusivity through May 2018. After this time, we expect generic competition for Adcirca and a resulting significant reduction of Adcirca sales, which would lead to a material adverse impact on Adcirca revenues. For additional information, refer toPart I, Item 1—Business Overview—Products to Treat Pulmonary Arterial Hypertension—Adcirca.2022 Annual Report 13 competition for any of our commercial PAH productsor other branded treprostinil manufacturers could have a significant, adverse impact on our treprostinil-based product revenues (including the anticipated revenues from new products such as Tyvaso DPI), our profits, and our stock price, and isprice. These potential effects are inherently difficult to predict. For additional discussion, refer to the risk factor entitled,Our intellectual property rights may not effectively deter competitors from developing competing products that, if successful, could have a material adverse effect on our revenues and profits, contained inPart I,Item 1A—Risk Factorsincluded in this Report.Agreements with Lilly Related to we entered into several agreements with Lilly regarding Adcirca, including a license agreement and a manufacturing and supply agreement.License Agreement Under the terms of the license agreement, Lilly granted us an exclusive license for the right to develop, market, promote, and commercialize Adcirca for the treatment of pulmonary hypertension in the United States. We agreed to pay Lilly royalties based on our net product sales of Adcirca. Lilly retained the exclusive rights to develop, manufacture, and commercialize pharmaceutical products containing tadalafil, the active pharmaceutical ingredient in Adcirca, for the treatment of pulmonary hypertension outside of the United States and for the treatment of other diseases worldwide. Lilly retained authority for all regulatory activities with respect to Adcirca and for setting the wholesale price of Adcirca, which has been and is expected to continue to be at price parity with Cialis®.Cialis. In May 2017, we amended our Adcirca license agreement with Lilly relating to Adcirca, in order to clarify and extend the term of the agreement and to amend the economic terms of the agreement following a patent expiry in November 2017. As a result, we are required to make milestone payments to Lilly equal to $325,000 for each $1.0 million in net product sales, plus a royalty equal to ten percent of our net product sales. In June 2020, we amended our Adcirca license agreement to extend its term through December 31, 2023. Following expiration, we will remain obligated to refund the purchase price of any Adcirca that we previously sold to distributors that expires unsold. For additional discussion, refer to ourcontainedincluded inPart I, Item 1—Business Overview—Products to Treat Pulmonary Arterial Hypertension.Manufacturing and Supply Agreement Under the terms of the manufacturing and supply agreement, Lilly agreed to manufacture Adcirca and distribute it on our behalf via its pharmaceutical wholesaler network, in the same manner that it distributes its own pharmaceutical products. Under the terms of this agreement, we take title to Adcirca upon its manufacture by Lilly. Adcirca is shipped to customers, generally pharmaceutical wholesalers, in accordance with customers' purchase orders received by Lilly. Lilly invoices and collects amounts due from the customer subject to customary discounts and rebates, if any, and remits the net collections to us. Although Lilly is providing these services on our behalf, we maintain the risk of loss as it pertains to inventory, product returns and nonpayment of sales invoices. The manufacturing and supply agreement will continue in effect until expiration or termination of the license agreement. We have orphan drug exclusivity in the United Statesexpiring March 2022, which precludes the FDA from approving any application to market the same drug for the same indication, except in limited circumstances. In addition, approval of our BLA conferred a 12-year data exclusivity period through March 2027, during which the FDA may not approve a biosimilar for Unituxin. Our orphan drug exclusivity in the United States for Unituxin expired in March 2022. Under a non-exclusive license agreement with The Scripps Research Institute, we pay a royalty of one percent of net Unituxin sales.Medtronic Agreement We are collaborating with Medtronic under an exclusive agreement to develop and commercialize Medtronic's proprietary intravascular infusion catheter for use with Medtronic's SynchroMed II implantable infusion pump and related infusion system components (together referred to as the Implantable System for Remodulin) to deliver Remodulin for the treatment of PAH in the United States, United Kingdom, Canada, France, Germany, Italy and Japan. Under our agreement, we have been working together at our expense to develop the Implantable System for Remodulin, conduct a clinical trial (which was completed in 2013) and obtain regulatory approval. If this development program is successful, our agreement provides that, upon commercialization, we will purchase infusion pumps and supplies from Medtronic and will also pay a ten percent royalty to Medtronic based on net product sales of Remodulin for use in the Implantable System for Remodulin within the exclusive territories, subject to certain adjustments specified in the agreement. The Implantable System forRemodulin will be exclusive to Remodulin so long as we purchase a minimum percentage of our annual requirement for implantable pump systems from Medtronic.sales. We will be solely responsible for all marketing and promotion of the Implantable System for Remodulin for the treatment of PAH in the exclusive territories. Our agreement with Medtronic expires on a country-by-country basis upon the later of ten years from first commercial sale in the relevant country, or ten years after wehave no longer have a valid patent claimpatents covering the use of Remodulin to treat PAH in such country. Either party may terminate the agreement immediately for safety, quality or regulatory concerns, in the event of the other party's bankruptcy or insolvency, or in the case of a material breach by the other party that remains uncured following the relevant cure period. In addition, either party may terminate the agreement without cause on one year's notice to the other party.Esuberaprost and the Toray Amended License Agreement In 2000, we licensed from Toray Industries, Inc. (Toray) the exclusive right to develop and market beraprost for cardiovascular indications. Beraprost is a chemically stable oral prostacyclin analogue in a sustained release formulation, which is approved to treat PAH in Japan and certain other countries. This license gives us exclusive rights to develop beraprost and its variants (including esuberaprost) throughout North America, Europe, and certain other territories. We are currently developing esuberaprost under this license agreement in combination with Tyvaso. Pursuant to a 2007 amendment to our license agreement with Toray, we issued 200,000 shares of our common stock to Toray. Toray has the right to request that we repurchase these shares (which have since split into 400,000 shares) upon 30 days prior written notice at the price of $27.21 per share. The 2007 amendment also provided for certain milestone payments during the development period and upon receipt of regulatory approval for beraprost in the United States or the EU. In 2011, we amended our license agreement with Toray to reduce the royalty rates in exchange for a total of $50.0 million in equal, non-refundable payments to Toray over the five-year period ending in 2015. As of December 31, 2015, this obligation was fully satisfied. Toray has the right to terminate the license agreement in the event of a change of control of our company under certain circumstances. In March 2017, we amended our license agreement with Toray to further reduce the royalty rate to single digits in exchange for contingent milestone payments in the event that we do not achieve certain clinical and regulatory events by certain dates. In addition, Toray granted us sole manufacturing rights for commercial esuberaprost. In 2011, the FDA granted orphan designation for esuberaprost for treatment of PAH. Thus, the FDA should grant orphan drug exclusivity if esuberaprost is approved; such exclusivity will extend for seven years from approval.Agreementpre-filled, semi-disposable system for subcutaneous delivery of Remodulin, which we refer to as RemUnity. Under the terms of the agreement, we are funding the development costs related to the semi-disposable system and will pay product fees and a single-digit royalty to DEKA based on commercial sales of the system and the Remodulin sold for use with the system.Remunity Pump. Our agreement with DEKA expires on the last to occur of twenty-five25 years from the first product launch under the agreement, or upon the expiration of the last valid claim of a patent licensed from DEKA under the agreement that covers the RemUnityRemunity Pump. Under the terms of the agreement, we funded the development costs related to the Remunity Pump, and will continue to fund further development costs associated with new versions of the pump. We pay product fees and a single-digit royalty to DEKA based on commercial sales of the Remunity Pump and the Remodulin drug product sold for use with the system. Either party may terminate the agreement immediately upon a material breach by the other party that is uncured following the relevant cure period, or in the event of the other party'sparty’s bankruptcy or insolvency.Table In November 2019, we entered into a supply agreement with an affiliate of Contents14 United Therapeutics, a public benefit corporation relatingrelated to therapies and technologies under development. These license agreements require us to make payments based on a percentage of sales if we are successful in commercially developing these therapies, and may require other payments upon the achievement of certain milestones. manufacture our primary supply of Remodulin, Tyvaso, Orenitram and Unituxin at our own facilities. In particular, we synthesize treprostinil, the active ingredient in RemodulinTyvaso, Tyvaso DPI, and Tyvaso,Remodulin, and treprostinil diolamine, the active ingredient in Orenitram, at our facility in Silver Spring, Maryland. We also produce dinutuximab, the active ingredient in Unituxin, at our Silver Spring facility. We also manufacture finisheddrug product for nebulized Tyvaso, Remodulin, and Unituxin at our Silver Spring facility. We manufacture Orenitram drug product and we package, warehouse, and distribute Tyvaso, Remodulin, Tyvaso, Orenitram, and Unituxin at our facility in Research Triangle Park, North Carolina. Tyvaso and Orenitram based on expected demand, and we contract with third-party contract manufacturers to supplement our capacity for some products, in order to mitigate the risk that we might not be able to manufacture internally sufficient quantities to meet patient demand. For example, Baxter Pharmaceutical Solutions, LLC is approved by the FDA, the EMA, and various other international regulatory agencies to manufacture Remodulin for us. We rely on Catalent PharmaWoodstock Sterile Solutions Inc. to serve as an additional manufacturer of Tyvaso,nebulized Tyvaso. We have no plans to develop a redundant manufacturing source for dinutuximab, the active ingredient in Unituxin, or for finished Unituxin or Orenitram drug product.weits affiliates are currently entirely responsible for manufacturing the Remunity Pump. We rely entirely on Minnetronix Inc. to manufacture the nebulizer used in our Tyvaso Inhalation System. We are working to obtain FDA approval of a third-party contract manufacturer to serve as an additionalMannKind is the sole manufacturer of finished Unituxin drug product and are constructing an additional facilitydevices for Tyvaso DPI. We currently rely on third-party contract manufacturers to increase our manufacturing capacity for dinutuximab, the active ingredient in Unituxin. We have no plans to develop a redundant manufacturing source for Orenitram.2022 Annual Report 15 development to commercializecommercialization of products to treat cardiovascularcardiopulmonary diseases and cancer. For the treatment of PAH, we compete with many approved products in the United States and the rest of the world, includingworld. In the following:
® (ambrisentan), Opsumit® (macitentan), Tracleer® (bosentan), generic bosentan, and generic •Flolan, VeletriU.S., these competitive therapies include oral ERAs (Letairisepoprostenol. Flolan (epoprostenol) is a prostacyclin that is delivered by intravenous infusion. Glaxo began marketing Flolan in the United States in 1996. In 2008, the FDA approved Teva's version ofambrisentan); prostacyclin-class therapies (Flolan (intravenous epoprostenol), Uptravi® (oral selexipag), Veletri® (intravenous epoprostenol), Ventavis® (inhaled epoprostenol), generic epoprostenol, for the treatment of PAH. In 2010, Actelion (which was acquired by Johnson & Johnson in 2017) commenced sales of Veletri, which is another version of intravenous epoprostenol;•Ventavis and Ilomedingeneric treprostinil injection); PDE-5 inhibitors (Revatio. Approved in 2004 in the United States (sildenafil), generic sildenafil, and in 2003 in Europe, Ventavis (iloprost) is an inhaled prostacyclin analogue. Ventavis is currently marketed by Actelion in the United Statesgeneric tadalafil); and by Bayer Schering Pharma AG (Bayer) in Europe. Iloprost is also marketed by Bayer in certain countries outside the United States in an intravenous form known as Ilomedin;•TracleerAdempas. Tracleer (bosentan) (riociguat), an oral ETRA therapy for the treatment of PAH, was approved in 2001 in the United States and in 2002 in Europe. Tracleer is marketed worldwide by Actelion.We anticipate generic bosentan will be launched in the United States during the 2018-2020 timeframe. Generic bosentan is already available in other countries;•Letairis. Approved in 2007 in the United States, Letairis (ambrisentan) is an oral ETRA therapy marketed by Gilead for the treatment of PAH. In 2008, Glaxo received marketing authorization from the EMA for Letairis in Europe, where it is known as Volibris®. In 2015, Gilead announced the positive results of theAMBITION study of ambrisentan and tadalafil as an up-front combination therapy for PAH, which we believe has driven increased use of Letairis and Adcirca. We expect generic ambrisentan will be launched in the United States in 2018;•Revatio and generic sildenafil citrate. Approved in 2005 in the United States, Revatio (sildenafil citrate) is an oral PDE-5 inhibitor therapy marketed by Pfizer. Revatio contains sildenafil citrate, the same active ingredient as Viagra. In 2012, several companies began marketing generic formulations of sildenafil citrate;•Opsumit®. Approved in 2013 in both the United States and in the EU, Opsumit (macitentan) is an oral ETRA therapy marketed by Actelion for the treatment of PAH;•Adempas®. Approved in 2013 in the United States and 2014 in the EU, Adempas (riociguat) is a sGC stimulator whichthat targets a similar vasodilatory pathway as PDE-5 inhibitorsinhibitors. These therapies are manufactured and is approved for chronic thromboembolic pulmonary hypertension and PAH. Adempas is an oral therapy marketed by Bayer;large pharmaceutical companies such as Johnson & Johnson, Gilead Sciences, Inc., and•Uptravi®. Approved in the United States in December 2015 and by the EMA in May 2016, Uptravi (selexipag) is an oral IP prostacyclin receptor agonist marketed by Actelion. Actelion also has applications pending in various other jurisdictions. Uptravi is also marketed in Japan by Nippon Shinyaku Co., Ltd.in the later stages of development, includingundergoing development. Therapies undergoing registration-phase studies, or which have completed registration-phase studies, include the following:Ralinepag,oral IP prostacyclin receptor agonistinjected TGF-beta modulator being developed by Arena Pharmaceuticals,Acceleron Pharma, Inc. (Arena)(Acceleron), which was acquired by Merck & Co., Inc. (Merck). Arena reportedMerck announced positive phase IItop-line results for ralinepag in patients with PAH in July 2017, and is currently planningof a phase III study;Trevyentformulation of treprostinildrug currently used to treat cancer under the trade name Gleevec®, is being developed by SteadyMed to treat PAH using SteadyMed's pre-filled, disposable PatchPump technology. SteadyMed received a refusal to file letter from the FDA in August 2017, and has indicated it plans to resubmit its NDA by the end of 2018;•Bardoxolone, an oral therapy being developed by Reata Pharmaceuticals, Inc.separately for treatment of PAH associated with connective tissue disease. Reata is enrolling patients inby three companies. Tenax Therapeutics, Inc. announced plans to initiate a phase III clinical trial, with data expected3 study of an oral formulation during the second half of 2018;•LIQ861, a powder formulation of treprostinil designed for deep-lung delivery using a disposable, dry powder inhaler being developed by Liquidia Technologies2023. Aerovate Therapeutics, Inc., which announced commencement of is conducting a phase III study in PAH patients in January 2018;•CAM2043, a liquid crystal gel formulation of treprostinil being developed as a once-weekly subcutaneous depot injection for PAH by Camurus AB. Camarus announced the commencement of a phase I2/3 clinical study in December 2017;•Treprostinil Technosphere®,of an inhaled, dry powder formulation of imatinib. Aerami Therapeutics Holdings, Inc. is conducting a phase 1 trial of an inhaled formulation of imatinib.by MannKind Corporation, which has announced the filing of an investigational new drug application forcompleted a phase I clinical1 study it plans to commence in 2018; andhealthy volunteers. Pharmosa initiated a phase 3 study in August 2021.•INS1009,Additional therapies being studied for PAH include Insmed Incorporated’s TPIP (INS1009, an inhaled nanoparticle formulationversion of a treprostinil prodrug being developed by Insmed Incorporated for PAH. Insmed announced the completion of a phase I study in September 2016.ETRAs)ERAs) are commonly prescribed as first-line treatments for the leastless severely ill PAH patients (functional class II patients).patients. As patients progress in their disease severity, (functional classes III and IV), less convenientadditional advanced approved therapies, such as inhaled prostacyclin analogues (such as Tyvaso)(including Tyvaso and Tyvaso DPI) or infused prostacyclin analogues (such as(including Remodulin) are then commonly added. Orenitram was the first approved oral prostacyclin-class therapy for PAH in the United States, and offers a less invasive and more convenient alternative therapy to Remodulin, Tyvaso, and Tyvaso.Tyvaso DPI. The use of available oral therapies could delay many patients'patients’ need for inhaled or infused prostacyclin therapy. As a result, the availability of oral therapies affects demand for our inhaled and infused products.As a result, manyOrenitram’s initial indication was limited to the improvement of exercise capacity, which may have led physicians may choose to prescribe Uptravi instead of Orenitram, which is indicated to improve exercise capacity. As noted above, however,Orenitram. However, Uptravi is an oral IP prostacyclin receptor agonist. While prostacyclin analogues such as Orenitram broadly mimic the effect of prostacyclin, IP prostacyclin receptor agonists bind selectively to the IP receptor, one of several prostacyclin receptors. In addition, Orenitram'sOrenitram’s label allows physicians flexibility to titrate each patient'spatient’s dosing up to a level according to tolerability, without any stated maximum. By contrast, Uptravi'sUptravi’s label limits uptitration tospecifies a specific maximum dose. Given the progressive nature of PAH, we believe many patients will initiate Orenitram or another one of our treprostinil-based therapies after their disease progresses while taking Uptravi. In August 2018, we announced the results of our FREEDOM-EV clinical study, which demonstrated that Orenitram delays time to clinical worsening, demonstrated improvement across key clinical measures, and, at study closure, indicated a positive impact on Uptravi.will also facebelieve that these clinical results and updated labeling have resulted in increased use of Orenitram.16 United Therapeutics, a public benefit corporation fromfor Adcirca since the launch of generic pharmaceutical companiestadalafil in the future. For example,United States in August 2018, which has significantly reduced our Adcirca revenues. We have also faced generic competition for Remodulin in the United States and certain European countries since 2019. Finally, we have settled litigationentered into settlement agreements with four generic drug companiesActavis and ANI permitting them to launch generic versions of RemodulinOrenitram in 2018. We also settled litigationJune 2027 and December 2027, respectively, and with ActavisWatson permitting it to launch a generic version of Orenitramnebulized Tyvaso in June 2027. We are also engagedJanuary 2026, or in litigation with a generic company seeking to launch a generic version Tyvaso.each case earlier under certain circumstances. For details regarding these and other potential generic competitors, see the section above entitledPatents and Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights.beta, a similarbeta), an antibody product developed by Apeiron Biologics AG that is already approved in Europe to treat high-risk neuroblastoma.neuroblastoma, but is not approved in the United States. In October 2016, EUSA Pharma (UK) Ltd. (which was acquired by Recordati Group in 2022) announced it had acquired global commercialization rights to dinutuximab beta,Qarziba. In addition, Y-mAbs Therapeutics, Inc. (Y-mAbs), is developing several GD-2 targeting drug candidates, and plans to file forin November 2020 obtained FDA approval for Danyelza® (naxitamab-gqgk) to treat pediatric and adult patients with relapsed and refractory (second line) high-risk neuroblastoma in 2018.ManySome of these companies have substantially greater financial, marketing, sales, distribution and technical resources, and more experience in research and development, product development, manufacturing and marketing, clinical trials, and regulatory matters, than we have.(FDC Act)(FDC Act), the Public Health Service Act (PHSA)(PHSA), and other federal statutes and regulations, may subject a company to a variety of administrative or judicialinvestigational new drug application (IND);IND; (3) clinical studies, including well-controlled clinical trials, in healthy volunteers and patients to establish safety, efficacy, and dose-response characteristics for each drug indication; (4) submission of an NDA to the FDA; and (5) FDA acceptance, review, and approval of the NDA.2022 Annual Report 17 (GCP)(GCP), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; and (3) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.(IRB)(IRB). An IRB may also require the clinical trial at a site to be halted temporarily or permanently for failure to comply with the IRB'sIRB’s requirements, or may impose other conditions.I1 involves the initial introduction of the drug into healthy human subjects or patients to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses, and, if possible, early evidence on effectiveness.II2 usually involves studies in a limited patient population to assess the efficacy of the drug in specific, targeted indications, explore tolerance and optimal dosage, and identify possible adverse effects and safety risks.III3 trials, also called pivotal studies, major studies or advanced clinical trials, demonstrate clinical efficacy and safety in a larger number of patients, typically at geographically diverse clinical study sites, and permit the FDA to evaluate the overall benefit-risk relationship of the drug and provide adequate information for drug labeling.IV4 studies are often conducted following marketing approval, in order to meet regulatory requirements or to provide additional data relatingrelated to drug use.an MAAa marketing authorization application is typically submitted to the EMA in the EU. FDA approval of the NDA is required before the product may be marketed in the United States. The NDA must include the results of all preclinical, clinical, and other testing and a compilation of data relatingrelated to the product'sproduct’s pharmacology, chemistry, manufacture, and controls."accelerated“accelerated approval," "fast track"” “fast track” status, "breakthrough therapy"“breakthrough therapy” status, and "priority review"“priority review” status are granted for certain drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists. These special pathways can significantly reduce the time it takes for the FDA to review aan NDA, but do not guarantee that a product will receive FDA approval.drug'sdrug’s product labeling to ensure that appropriate information is communicated to health care professionals and consumers. In18 United Therapeutics, a public benefit corporation FDA'sFDA’s current Good Manufacturing Practices (cGMP)(cGMP).FDA'sFDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even after a resubmission, the FDA may decide that the application does not satisfy the regulatory criteria for approval.internet.Internet.IV4 clinical studies, and/or a risk evaluation and mitigation strategy (REMS)(REMS) to help ensure that the benefits of the drug outweigh the potential risks. A REMS can include medication guides, communication plans for healthcare professionals, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. Additionally, quality control as well as drug manufacture, packaging, and labeling procedures must continue to conform to cGMP requirements. Manufacturing facilities are subject to continual review and periodic inspections by the FDA and certain state agencies.
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In 2018, the FDA advanced policies aimed at promoting drug competition and patient access to generic drugs, such as issuing guidance about making complex generic drugs and the circumstances in which approval of a generic product application may be delayed.
As a practical matter, this is available only if the RLD is approved for multiple indications, at least one of which is not patent protected.
special type of NDA submitted under Section 505(b)(2) of the FDC Act, commonly referred to as a Section 505(b)(2) NDA, which enables the applicant to rely, in part, on the FDA'sFDA’s finding of safety and efficacy data for an existing product, or published literature, in support of its application.
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drugs, after approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.
In July 2018, the FDA announced an action plan to encourage the development and efficient review of biosimilars, including the establishment of a new office within the agency that will focus on therapeutic biologics and biosimilars. On December 20, 2020, Congress amended the Public Health Services Act as part of the COVID-19 relief bill to further simplify the biosimilar review process by making it optional to show that conditions of use proposed in labelling have been previously approved for the reference product, which used to be a requirement of the application. In September 2021, the FDA issued two guidance documents, one final and one draft, intended to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to describe the FDA’s interpretation of certain statutory requirements added by the BPCIA.
Effective March 2020, certain products that were approved as drugs under the FDC Act, such as insulin and human growth hormone, are now deemed to be biologics under the PHSA, which means they may face competition through the biosimilars pathway and they may not be eligible for the twelve-year period of exclusivity granted to new BLAs. Because biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries.
Cell-and FDORA now provides for multiple first interchangeable biosimilars to qualify for exclusivity if they are approved on the same day.
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U.S.
controls and may require FDA clearance of a premarket notification (510(k)(
application (
PMA).pathway which allows for sponsors to interact directly with the FDA during the development process and to receive prioritized review of their submission. In January 2021, the FDA released final guidance on the Safer Technologies Program (
STeP), to encourage the innovation and market entry of device technologies that are safer than current alternatives but that do not otherwise satisfy the breakthrough device criteria, including device technologies to treat non-life-threatening or reasonably reversible conditions. STeP is modeled after the breakthrough device program and is intended to provide similar benefits, including increased communication with the FDA and prioritized review. In October 2022, the FDA issued| 22 | United Therapeutics, a public benefit corporation | ||||
During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping requirements, and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims about them. The clinical investigators in the clinical study are also subject to FDA regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements. Additionally, after a trial begins, the sponsor, the FDA, or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
United States. Additionally, each foreign country subjects medical devices to its own regulatory requirements. States also impose regulatory requirements on medical device manufacturers and distributors. Failure to comply with the applicable federal or state requirements could result in, among other things: (1) fines, injunctions, and civil penalties; (2) recall or seizure of products; (3) operating restrictions, partial suspension, or
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participation of a notified body.
The Cures Act sets forth a number of provisions pertaining to combination products, such as procedures for negotiating disagreements between sponsors and the FDA and requirements intended to streamline FDA premarket reviews of combination products that contain an already-approved component. For drug-device combination products, comprised of an FDA-approved drug and device primary mode of action, the Cures Act applies Hatch Waxman requirements to the premarket review process such that a patent dispute regarding the listed drug may result in the delay of the 510(k) clearance or PMA approval of the combination product. Furthermore, the Cures Act applies exclusivity provisions (e.g., new chemical entity and orphan drug exclusivities) to the device clearance and approval process for combination products with a device primary mode of action.
•Expectations of revenues, expenses, profitability, and cash flows, including our expectation that revenue growth will recommence in 2019, following a temporary decline in 2018;•The sufficiency of current and future working capital to support operations;•Our ability to obtain financing on terms favorable to us or at all;•The maintenance of domestic and international regulatory approvals;•Our ability to maintain attractive pricing for our products, in light of increasing competition, including from generic entries and pressure from government and other payers to decrease the costs associated with healthcare;•The expected volume and timing of sales of our existing commercial products—Remodulin, Tyvaso, Orenitram, Adcirca and Unituxin—and potential future commercial products;•The timing and outcome of clinical studies, other research and development efforts, and related regulatory filings and approvals, including (among others) those described in this Report relating to ourFREEDOM-EVstudy of Orenitram, ourBEATstudy of esuberaprost, our collaboration with DEKA to develop the RemUnity system, our plan to develop a pain-free subcutaneous formulation of treprostinil called RemoPro, and our program to develop the Implantable System for Remodulin, which we are working on with Medtronic;•The outcome of pending and potential future legal and regulatory actions, including investigations, audits and inspections, by the FDA and other regulatory and government enforcement agencies;•The impact of competing therapies on sales of our commercial products, including the impact of generic products such as generic forms of Adcirca, which we expect will become available following loss of regulatory exclusivity in May 2018; generic forms of Remodulin, which we expect four generic companies will launch in June 2018 and December 2018; and newly-developed therapies, such as Uptravi;•The expectation that we will be able to manufacture sufficient quantities and maintain adequate inventories of our commercial products, through both our in-house manufacturing capabilities and third-party manufacturing sites, and our ability to obtain and maintain related approvals by the FDA and other regulatory agencies;•The adequacy of our intellectual property protection and the validity and expiration dates of the patents we own or license, as well as the regulatory exclusivity periods for our products;•Our ability to defend our intellectual property against generic and other challenges, including but not limited to the challenges described in this Report related to Remodulin, Tyvaso and Orenitram;•Any statements that include the words "believe," "seek," "expect," "anticipate," "forecast," "project," "intend," "estimate," "should," "could," "may," "will," "plan," or similar expressions; and•Other statements contained or incorporated by reference in this Report that are not historical facts.•The(1) the COVID-19 pandemic, which initially caused us to suspend enrollment of most of our clinical studies, and may do so again; (2) the drug is ineffective, or physicians and/or patients believe that the drug is ineffective, or that other therapies are more effective or convenient;•We fail to reach agreement with the applicable regulatory agencies regarding the scope or design of our clinical trials;•Patients(3) patients do not enrollpatients drop out,in orwe do not observe worsening events,complete clinical trials at the rate we expect;•Ongoing(4) we, ornew clinical trials conducted by drug companies in addition to our own clinical trials reduce the availability of patients for our trials;•Ourclinical trial sitescontracted clinical trial administratorsorclinical studies conducted entirely byother third parties do not adhere to trial protocols and required quality controls under good clinical practices(GCP)(•Patients(5) patients experience severe side effects during treatment or die during our trials because of adverseevents related toevents; and (6) thetrial drug, advanced disease, or other medical complications; and•Theresults ofourclinical trials conducted in a particular country are not acceptable to regulators in other countries.- limited.
- products.
- disruption.
- recalls.
If we had to replace our own manufacturing operations or a third-party manufacturer, theThe FDA and its international counterparts would require new testing and compliance - facilities, or those of our third-party manufacturers, which could result in delays in obtaining necessary regulatory approvals for our products.
- all.
•We may be unable to obtain rights to intellectual property that we determine we need for our business at a reasonable cost or at all;•If any of our product licenses or purchase agreements are terminated, we may lose our rights to develop, make and sell the products to which such licenses or agreements relate;•Our rights to develop and market products to which the intellectual property relates are frequently limited to specific territories and fields of use (such as treatment of particular diseases); and•If a licensor of intellectual property fails to maintain the intellectual property licensed, we may lose any ability to prevent others from developing or marketing similar products covered by such intellectual property. In addition, we may be forced to incur substantial costs to maintain the intellectual property ourselves or take legal action seeking to force the licensor to do so.Failurequarterly and annual financial results and any failure to meet ourQuarterly and annual financial results;•Timingtiming of enrollment and results of our clinical trials;Announcementsannouncements regarding generic or other challenges to the intellectual property - new products;
Physician,physician, patient, investor, or public concerns regarding the efficacy and/or safety of products marketed or being developed by us or by others;Changeschanges in, or new Announcementsannouncements of technological innovations or new products or announcements regarding our existing products, including in particular the development of new, competing Substantialsubstantial sales of our common stock by us or our existing shareholders, or concerns that such sales may occur;Futurefuture issuances of common stock by us orRumors among,rumors or incorrect statements by investors and/or analysts concerning our company, our products, or our operations;Failuresfailures or delays in our efforts to obtain or maintain - approvals;
Discoverydiscovery of previously unknown problems with our marketed products, or problems with our manufacturing, regulatory, compliance, promotional, marketing or sales activities that result in regulatory penalties or restrictions on our products, up to the withdrawal of our products from the market;- and
Accumulationaccumulation of significant short positions in our common stock by hedge funds or other investors or the significant accumulation of our common stock by hedge funds or other institutional investors with investment strategies that may lead to short-term •General market conditions.•Adiscourage a merger, tender offer, or proxy contest;•Thethe assumption of control by a holder of a large block of our securities; and/or•Thethe replacement or removal of current management by our shareholders.(1)Refer to Note 10—Stockholders' Equity—Earnings Per Common Shareto our consolidated financial statements for the computation of basic and diluted net income per share.- Tyvaso and Tyvaso DPI. Tyvaso is an inhaled formulation of the prostacyclin analogue treprostinil, approved by the FDA and regulatory authorities in Argentina, Israel, and Japan to improve exercise ability in patients with pulmonary arterial hypertension (PAH). Tyvaso was also approved by the FDA in March 2021 and by regulators in Israel in December 2022 to improve exercise ability in patients with PH-ILD. In May 2022, we also obtained FDA approval of Tyvaso DPI to treat PAH and PH-ILD, and we initiated commercial shipments of Tyvaso DPI to our distributors in June 2022.
•Tyvaso, an inhaled formulationIn February 2021, we launched U.S. sales oftreprostinil, approved bytheFDA to improve exercise ability in PAH patients.- Remunity Pump, a new subcutaneous delivery system for Remodulin.
- Orenitram, a tablet dosage form of treprostinil, approved by the FDA to delay disease progression and improve exercise capacity in PAH patients.
- Unituxin, a monoclonal antibody approved in the United States, Canada, and Japan for treatment of high-risk neuroblastoma.
•Unituxin, a monoclonal antibody approved by the FDA for the treatment of high-risk neuroblastoma.- (1)
- Refer toShare-Based Compensation
Expensesection below for discussion. (1)Refer toShare-Based Compensation Expensesection below for discussion.- (1)
- Refer toShare-Based Compensation
Expensesection below for discussion. (1)Calculation is not meaningful.(1)Calculation is not meaningful.- (1)
- Long-term debt obligations include future principal and interest payments on our
LIBOR-basedadjusted variable rate obligations under the20162022 Credit Agreement, assuming contractual maturity of the 2022 Credit Agreement.We extended the maturity date of the 2016The 2022 Credit Agreementbywill mature in March 2027. As of December 31, 2022, we have classified the entire $800.0 million outstanding balance as a non-current liability because we do not intend to repay any portion of this amount within oneyear in January 2018 to extend its maturity to January 2023.year. Refer to Note 7—Debt to our consolidated financial statements for further details. - (1)
- Included in cash and cash equivalents
on the accompanyingin our consolidated balance sheets. (1)Represents interest expensefor each of the years ended December 31, 2022, 2021, and 2020, related todebtour borrowings under the 2022 Credit Agreement andamortization2018 Credit Agreement.(1)In connection with our license agreement with Toray Industries Inc. (Toray), we issued 200,000 shares of our common stock (which have since split into 400,000 shares) to Toray in 2007, and provided Toray the right to require us to repurchase the shares at a price of $27.21 per share.(2)The preferred stock issued by the variable interest entity we consolidate includes rights that allow the holders to redeem the preferred stock at the original issuance price in exchange for cash. Refer to Note 4—Investments—Variable Interest Entityfor more information.(1)Prior to the adoption of ASU 2016-09 on January 1, 2017, the weighted-average expected forfeiture rate used in estimating the fair value of stock options granted to employees was 5.4% and 1.5% in 2016 and 2015, respectively. Refer to Note 3—Recently Issued Accounting Standardsfor more information. During 2016, we issued stock options to all our employees, which resulted in an increase in the forfeiture rate compared to prior years.- (1)
On January 1, 2017, we adopted ASU 2016-09. Upon adoption of ASU 2016-09, we began toWe recognizeexcessthese tax benefitsas income tax benefits onin our consolidated statements ofoperations.(1)Prior to the adoption of ASU 2016-09 on January 1, 2017, the weighted-average expected forfeiture rate used in estimating the fair value of STAP awards granted to employees was 8.8 percent in 2016 and 2015. Refer to Note 3—Recently Issued Accounting Standardsfor more information.- (1)
- Calculated using the treasury stock method.
Certain convertible notes,The common shares underlying certain stock options - (1)
- Refer to Note
12—11—Employee Benefit Plans—Supplemental Executive Retirement Plan, which identifies the captions within our consolidatedstatementstatements of operations where reclassification adjustments were recognized and their associated tax impact. (2)In the fourth quarter of 2016, we changed the functional currency for our foreign entities to the U.S. dollar. The loss on foreign currency translation attributable to each foreign entity at the time of this change will remain in accumulated other comprehensive loss until the sale or substantial liquidation of the foreign entity.- (1)
During the second quarter of 2016, certain participants in the SERP departed before retirement age under the terms of the SERP. As a result, we remeasured the benefit obligation under the SERP and recorded a reduction to the benefit obligation of $11.3 million, an increase to "Actuarial (loss) gain arising during period, net of tax" within "Accumulated other comprehensive loss" of $7.1 million and a decrease to "Deferred tax assets, net" of $4.2 million.(2)TheThis amountincluded under the caption "Other current liabilities" on our consolidated balance sheetsrepresents the benefit obligation due to participants who are eligible to retire and whose benefit payments could commence within one year of the respective balance sheet date.(1)Refer to Note 10—Stockholders' Equity—Accumulated Other Comprehensive Loss.Year Ended December 31, 2020 Total revenues $ 483.3 $ 516.7 $ 293.1 $ 122.9 $ 67.3 $ — $ 1,483.3 Cost of sales 24.5 23.2 18.7 12.6 29.1 — 108.1 Gross profit $ 458.8 $ 493.5 $ 274.4 $ 110.3 $ 38.2 $ — $ 1,375.2 We commencedTotal revenues and cost of sales include both the drug product and the respective inhalation devices for both Tyvaso and Tyvaso DPI.(1)Primarily Europe.(2)Total includes other revenue of $5.2 million for the year ended December 31, 2015.(1)Operating results for the quarters ended December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017 included $66.2 million, $(24.1) million, $(9.4) million and $(15.6) million, net of tax, for STAP related share-based compensation expense (benefit), respectively.(2)Operating results for the quarters ended December 31, 2016, September 30, 2016, June 30, 2016 and March 31, 2016 included $64.2 million, $28.7 million, $(7.0) million and $(95.5) million, net of tax, for STAP related share-based compensation expense (benefit), respectively.- (1)
- All outstanding stock options were issued under our two equity incentive plans approved by security holders in 1999
(the 1999 Plan)and2015 (the 2015 Plan). All2015. The majority of outstandingrestricted stock units (RSUs)RSUs were issued under the 2015 Plan. In addition, our employees have outstanding rights to purchase our common stock at a discount as part of ourESPP. Information regarding these plans is containedESPP, which was approved by security holders inNote 9—Share-Based Compensationto our consolidated financial statements. Aside from stock options issued under the 1999 Plan, stock options and RSUs issued under the 2015 Plan, and shares issued under the ESPP, we do not have any outstanding stock options, warrants or rights that are outstanding or available for issuance as described in Regulation S-K Item 201(d).2011. No further awards will be issued under the 1999 Plan. (2)- (3)Column (a) includes
5,878,3236,608,019 shares of our common stock issuable upon the exercise of outstanding stock options issued under the 1999 and 2015Plan and 23,040Plan; 836,866 shares issuable upon the vesting of outstanding RSUs issued under the 2015 Plan; and 4,385 shares issuable upon the vesting of outstanding RSUs issued under the 2019 Inducement Plan. The 2015 Planusesand 2019 Inducement Plan use a share counting formula for determining the number of shares available for issuance under theplan.plans. In accordance with this formula, each option issued under the 2015 Plan counts as one share, while each RSU issued under the 2015 Plan and the 2019 Inducement Plan counts as 1.35 shares and 2.14shares.shares, respectively. The number under column (a) represents the actual number of shares issuable under our outstanding awards without giving effect to the share counting formula.The number under column (c) represents the number of shares available for issuance under this plan based on each such available share counting as one share. (3)(4)- *
- Confidential treatment has been
grantedrequested with respect to certain portions of this exhibit pursuant to Rule 406 of the Securities Act of 1933, as amended or Rule24b-224b‑2 of the Securities Act of 1934, as amended. The omitted portions of this document have been filed with the Securities and Exchange Commission. - Designates management contracts and compensation plans.
***†Confidential treatment has been requested with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. The omitted portions of this document have been filed with the Securities and Exchange Commission.
IRA. certified nurse-midwives. 21st Century Cures Act Corporate Website Name Michael Benkowitz James C. Edgemond Paul A. Mahon, J.D. transplantable organs. Dr. Rothblatt has a Ph.D. in medical ethics from the University of London. and corporate compliance activities, most company-wide administrative functions, including human resources and information technology, many of our business development efforts, and several of our key business alliances and partnerships. Products and Our Operations be significantly lower than we expect. We cannot predict with certainty In addition, failure to obtain, or delays in obtaining, regulatory approval has in the past and could in the future require us to recognize impairment charges. products. In many markets outside the United States, governments control the prices of prescription pharmaceuticals through the implementation of reference pricing, price cuts, rebates, revenue-related taxes, and profit control. Financial pressures may cause United States government payers and/or private health insurers to implement policies that would reduce reimbursement rates for our products, limit future price increases, cap reimbursement rates for pharmaceuticals to rates paid internationally, require the automatic substitution of generic products, demand more rigorous requirements for initial coverage for new products, implement step therapy policies that require patients to try other medicines, including generic products, before using our products, or take other similar steps that could make it more difficult for patients to access our products. See, for example, the discussion of the Inflation Reduction Act in the risk factor below entitled Our manufacturing strategy exposes us to significant risks. part on third parties to perform activities that are critical to our business. Additional risks complaints; (5) obtaining medical device clearances and In the United States, we derive all of our treprostinil-based revenues from sales to two distributors, Accredo and CVS Specialty. If either of these two distributors places significantly larger or smaller orders in a given time period, our revenues can be materially impacted in a way that does not reflect patient demand. certain products we are developing will depend on clinical trials sponsored by Reports of actual or perceived side effects and adverse events associated with our products regulatory approvals to be revoked. otherwise negatively impacted. We may not maintain adequate insurance coverage to protect us against significant product liability claims. If we fail to attract and retain key management and qualified scientific and technical personnel, we may not be able to achieve our business objectives. countries. Failure to obtain approvals on a timely basis or to comply with these requirements could delay, disrupt, or prevent commercialization of our products. The increasing use of social media platforms presents new risks and challenges. January 1, 2017 - December 31, 2017 January 1, 2016 - December 31, 2016 January 1, 2015 - December 31, 2015 The price of our common stock could decline sharply due to general market conditions as well as the following factors, among others: holdings. For example, as a result of our Non-competition and all other restrictive covenants in most of our employment agreements will terminate upon a change of control that is not approved by our Board. Similarly, a change of control, under certain circumstances, could Unresolved Staff Comments Properties clinical studies. research, development, and manufacturing facilities Legal Proceedings Mine Safety Disclosures Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities January 1 - March 31 April 1 - June 30 July 1 - September 30 October 1 - December 31 Number of Holders Comparison of Five-Year Total Cumulative Shareholder Return Consolidated Statements of Operations Data: Revenues Operating income Net income Net income per common share: Basic(1) Diluted(1) Consolidated Balance Sheet Data: Cash, cash equivalents and marketable investments Total assets Total non-current liabilities Total stockholders' equity Management’s Discussion and Analysis of Financial Condition and Results of Operations All statements in this filing are made as of the date this Report is filed with the U.S. Securities and Exchange Commission ( For additional detail regarding our commercial products, seePart I, Item 1—Business—Our Commercial Products. Our operating expenses include the costs described below. individual product candidate. The fair Although we Net product sales: Remodulin Tyvaso Adcirca Orenitram Unituxin Other Total revenues higher gross-to-net deductions. Balance, January 1, 2017 Provisions attributed to sales in: Current period Prior periods Payments or credits attributed to sales in: Current period Prior periods Balance, December 31, 2017 Balance, January 1, 2016 Provisions attributed to sales in: Current period Prior periods Payments or credits attributed to sales in: Current period Prior periods Balance, December 31, 2016 Balance, January 1, 2015 Provisions attributed to sales in: Current period Prior periods Payments or credits attributed to sales in: Current period Prior periods Balance, December 31, 2015 Cost of Category: Cost of product sales Share-based compensation expense(1) Total cost of product sales Category: Research and development projects Share-based compensation expense (benefit)(1) Total research and development expense Category: General and administrative Sales and marketing Share-based compensation expense(1) Total selling, general and administrative expense Share-Based Compensation Category: Stock options Restricted stock units Share tracking awards plan Employee stock purchase plan Total share-based compensation expense The table below summarizes share-based compensation expense Cost of product sales Research and development Selling, general and administrative Total share-based compensation expense Cash and cash equivalents Marketable investments—current Marketable investments—non-current Total cash and cash equivalents and marketable investments Net cash provided by operating activities Net cash (used in) provided by investing activities Net cash provided by (used in) financing activities liabilities for our STAP awards, and tax-related payables and receivables. provided by operating activities was due to other changes in assets and liabilities. Unsecured Revolving Credit Facilities Operating lease obligations Long-term debt obligations(1) Obligations under the STAP(2) Obligations under the SERP(3) Purchase obligations(4) Total(5) details. products covered by the license agreements. Refer to Note 12— For a roll-forward of the liability accounts associated with our gross-to-net deductions, see Quantitative and Qualitative Disclosures About Market Risk Held-to-maturity investments Available-for-sale investments Weighted average interest rate During sustained periods of instability and uncertainty in the financial markets, we may be subjected to additional investment-related risks that could materially affect the value and liquidity of our investments. In light of these risks, we actively monitor market conditions and developments specific to the securities and security classes in which we invest. In addition, we believe that we maintain a conservative investment approach in that we invest exclusively in unstructured, highly-rated securities with relatively short maturities that we believe reduce our exposure to undue risks. While we believe that we take prudent measures to mitigate investment related risks, such risks cannot be fully eliminated, as circumstances can occur that are beyond our control. Corporation: Corporation: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Assets Current assets: Cash and cash equivalents Marketable investments Accounts receivable, no allowance for 2017 and 2016 Inventories, net Other current assets Total current assets Marketable investments Goodwill and other intangible assets, net Property, plant and equipment, net Deferred tax assets, net Other non-current assets Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses Share tracking awards plan Other current liabilities Total current liabilities Line of credit Other non-current liabilities Total liabilities Commitments and contingencies—Note 13 Temporary equity Stockholders' equity: Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued Series A junior participating preferred stock, par value $.01, 100,000 shares authorized, no shares issued Common stock, par value $.01, 245,000,000 shares authorized, 69,858,840 and 69,340,985 shares issued, and 43,239,624 and 42,965,856 shares outstanding at December 31, 2017 and 2016, respectively Additional paid-in capital Accumulated other comprehensive loss Treasury stock, 26,619,216 and 26,375,129 shares at December 31, 2017 and 2016, respectively Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Revenues: Net product sales Other Total revenues Operating expenses: Cost of product sales Research and development Selling, general and administrative Settlement of loss contingency Total operating expenses Operating income Other (expense) income: Interest expense Gain on sale of intangible asset Other, net Impairment of cost method investment Total other (expense) income, net Income before income taxes Income tax expense Net income Net income per common share: Basic Diluted Weighted average number of common shares outstanding: Basic Diluted Net income Other comprehensive income (loss): Foreign currency translation gains (losses) Defined benefit pension plan: Actuarial (loss) gain arising during period, net of tax Amortization of actuarial gain and prior service cost included in net periodic pension cost, net of tax Total defined benefit pension plan, net of tax Unrealized loss on available-for-sale securities, net of tax Other comprehensive (loss) income, net of tax Comprehensive income Balance, December 31, 2014 Net income Foreign currency translation adjustments Defined benefit pension plan Shares issued under employee stock purchase plan Conversion of 2016 convertible notes Equity component—2016 convertible notes Repurchase of shares Exercise of stock options Tax benefit from exercises of non-qualified stock options Share-based compensation Balance, December 31, 2015 Net income Foreign currency translation adjustments Defined benefit pension plan Shares issued under employee stock purchase plan Conversion of 2016 convertible notes Equity component—2016 convertible notes Shares issued upon expiration of warrants Repurchase of shares Exercise of stock options Tax benefit from exercises of non-qualified stock options Share-based compensation Balance, December 31, 2016 Net income Foreign currency translation adjustments Unrealized loss on available-for-sale securities Defined benefit pension plan Shares issued under employee stock purchase plan Shares issued upon expiration of warrants Repurchase of shares Exercise of stock options Share-based compensation Cumulative effect of accounting change Consolidation of variable interest entity Balance, December 31, 2017 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Share-based compensation expense Impairment of cost method investments Gain on sale of intangible asset Other Excess tax benefits from share-based compensation Changes in operating assets and liabilities: Accounts receivable Inventories Accounts payable and accrued expenses Other assets and liabilities Net cash provided by operating activities Cash flows from investing activities: Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Purchases of held-to-maturity and other investments Maturities of held-to-maturity investments Purchases of available-for-sale investments Maturities of available-for-sale investments Purchase of investments held at cost Purchase of investments under the equity method Consolidation of variable interest entity Gain on sale of intangible asset Intangible assets acquired, net Net cash (used in) provided by investing activities Cash flows from financing activities: Proceeds from line of credit Principal payments of debt Payments of debt issuance costs Payments to repurchase common stock Proceeds from exercise of stock options Issuance of stock under employee stock purchase plan Excess tax benefits from share-based compensation Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental cash flow information: Cash paid for interest Cash paid for income taxes Cash paid for settlement of loss contingency Non-cash investing and financing activities: Non-cash additions to property, plant and equipment Issuance of common stock upon conversion of convertible notes On September 30, 2021, we converted to a Delaware public benefit corporation ( and Unituxin. Certain prior year amounts have been reclassified to conform to the current year presentation. In Note 10— transaction between market participants at the measurement date under current market conditions. Such transactions to sell an asset or transfer a liability are assumed to occur in the principal market for that asset or liability, or in the absence of the principal market, the most advantageous market for the asset or liability. operations within Raw materials Work-in-progress Finished goods Total inventories Goodwill and Other Intangible Assets losses related to indefinite-lived intangible assets during the year ended December 31, 2020. intangible assets subject to amortization. Goodwill Other intangible assets: Technology, patents and trade names In-process research and development Customer relationships and non-compete agreements Total Land and land improvements Buildings, building improvements and leasehold improvements Buildings under construction Furniture, equipment and vehicles Less—accumulated depreciation Property, plant and equipment, net Depreciation expense for the years ended December 31, For our rebate and chargeback liabilities, in particular, the time lag experienced in the payment of the rebate or chargeback may result in revisions of these accruals in future periods. However, based on our significant history and experience estimating these accruals and our development of these accruals based on the expected value method, we do not believe there will be significant changes to our estimates recorded during the period of sale. We recognized aggregate increases in our net product sales of $7.4 million, $2.1 million, and $0.5 million for the years ended December 31, 2022, 2021, and 2020, respectively, related to changes in these estimates of revenue recognized from product sales in prior periods. Our liability for rebates and chargebacks is included in accounts payable and accrued expenses in our consolidated balance sheets. As of December 31, 2022 and 2021, our accrued rebates and chargebacks were $81.3 million and $67.8 million, respectively. In addition, during the years ended December 31, 2022, 2021, and 2020, we recognized $198.5 million, $218.6 million, and $195.9 million, respectively, in revenue deductions associated with rebates and chargebacks. Prompt pay discounts are recorded as a deduction to the accounts receivable balance presented in our consolidated balance sheets. accrued expenses participation in governmental-funded programs. Income Taxes U.S. government and agency securities Corporate notes and bonds Total Reported under the following captions on the consolidated balance sheet: Cash and cash equivalents Current marketable investments Non-current marketable investments Total Due within one year Due in two to three years Total during the years ended December 31, 2022 and 2021. Due within one year Due in two to three years Total Investments in Privately-Held Companies These impairment charges were recorded within Entities ( operations. credit, and the VIEs’ assets cannot be used to settle the VIEs’ liabilities. Our total risk of loss is the $72.9 million of assets we contributed, as noted above. Assets and liabilities subject to fair value measurements are as follows (in millions): Assets Money market funds(1) Time deposits(2) U.S. government and agency securities(2) Corporate debt securities(2) Total assets Liabilities Contingent consideration(3) Total liabilities Assets Money market funds(1) U.S. government and agency securities(2) Total assets Liabilities Contingent consideration(3) Total liabilities Note 4— Accounts payable Accrued expenses: Sales related (royalties, rebates and fees) Payroll related Other Total accrued expenses Total accounts payable and accrued expenses 7. Debt Agreement two such extensions. To date, we have elected to calculate interest on the outstanding balance at an adjusted Term SOFR plus an applicable margin. year. In connection with the 2022 Credit Agreement, we capitalized debt issuance costs of $7.5 million, which are being amortized to interest expense over the contractual term of the Credit Facility interest expense(1) Convertible Notes interest expense Other interest expense Total interest expense Common stock subject to repurchase(1) Preferred stock with redemption rights(2) Total 2015. The following table reflects the components of share-based compensation expense Stock Options Restricted Stock Units Share Tracking Awards Employee Stock Purchase Plan Total Share-based compensation expense before tax Share-based compensation capitalized as part of inventory input for our stock options as we do not have sufficient historical data related to stock option exercises. Under the simplified approach, the expected term reflects the weighted average midpoint between the vesting date and the expiration date of the awards. For the expected term input related to our STAP awards, refer to the historical volatility based on weekly price observations of our common stock during the period immediately preceding an award that is equal to its expected term up to a maximum period of five years. We believe that the volatility in the price of our common stock over the preceding five years generally provides a reliable projection of future long-term volatility. Expected term of options (in years) Expected volatility Risk-free interest rate Expected dividend yield A summary of the Outstanding at January 1, 2017 Granted Exercised Forfeited Outstanding at December 31, 2017 Exercisable at December 31, 2017 Unvested at December 31, 2017 The weighted average fair value of a stock option granted during each of the years in the three-year period ended December 31, value of stock options that vested for each of the years in the three-year period ended December 31, Cost of product sales Research and development Selling, general and administrative Share-based compensation expense before tax Related income tax benefit Share-based compensation expense, net of tax Number of options exercised Cash received from options exercised Total intrinsic value of options exercised Tax benefits realized from options exercised(1) recorded as follows (in millions): in June 2015. sheets. A description of the expected term input for STAP awards is provided below: Expected term of awards (in years) Expected volatility Risk-free interest rate Expected dividend yield The closing price of our common stock was A summary of the Outstanding at January 1, 2017 Granted Exercised Forfeited Outstanding at December 31, 2017 Exercisable at December 31, 2017 Unvested at December 31, 2017 2022 is presented below: Cost of product sales Research and development Selling, general and administrative Share-based compensation expense (benefit) before tax Related income tax (benefit) expense Share-based compensation expense (benefit), net of tax Cash paid to settle STAP Numerator: Net income Denominator: Weighted average outstanding shares—basic Effect of dilutive securities(1): Convertible notes Warrants Stock options, restricted stock units and employee stock purchase plan Weighted average shares—diluted(2) Earnings per common share: Basic Diluted Stock options, restricted stock units and warrants excluded from calculation(2) Accumulated Other Comprehensive Loss Balance, January 1, 2017 Other comprehensive (loss) income before reclassifications Amounts reclassified from accumulated other comprehensive income Net current-period other comprehensive (loss) income Balance, December 31, 2017 Balance, January 1, 2016 Other comprehensive income (loss) before reclassifications Amounts reclassified from accumulated other comprehensive income Net current-period other comprehensive income (loss) Balance, December 31, 2016 Components of income tax expense Current: Federal State Total current Deferred Federal State Total deferred Total income tax expense Presented below is a reconciliation of income tax expense computed at the statutory federal tax rate of 21 percent in 2022, 2021, and 2020 to income tax expense as reported (in millions): Federal taxes at 35 percent Tax reform Section 199 deduction Nondeductible portion of DOJ settlement Change in valuation allowance General business credits State taxes, net of federal benefit Impact of windfall tax benefits upon exercise of stock options Nondeductible compensation expense Other Total income tax expense Deferred tax assets: Intangible assets Nonqualified stock options SERP STAP awards Impairments Other Total deferred tax assets Deferred tax liabilities: Plant and equipment principally due to differences in depreciation Other Net deferred tax assets before valuation allowance Valuation allowance Net deferred tax assets assets. Projected benefit obligation at the beginning of the year Service cost Interest cost Plan amendments Actuarial loss (gain)(1) Projected benefit obligation at the end of the year Fair value of plan assets at the end of the year Unfunded at end of the year Amount included in Other current liabilities(2) 2018 2019 2020 2021 2021 Thereafter Total The following Discount Rate Salary Increases Service cost Interest cost Amortization of prior service cost Amortization of net actuarial (gain) loss Total Amortization of prior service cost: Research and development Selling, general and administrative Total Amortization of net actuarial (gain) loss: Research and development Selling, general and administrative Total Total amortization of prior service cost and net actuarial (gain) loss Tax benefit Total, net of tax Amounts Net unrecognized actuarial (loss) gain Net unrecognized prior service cost (benefit) Total Tax expense (benefit) Total, net of tax Net unrecognized actuarial (gain) loss Net unrecognized prior service cost Total Tax expense (benefit) Total, net of tax Amortization of prior service cost Amortization of net actuarial gain Total Employee Retirement Plan Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 2019 2020 2021 2022 Thereafter Total Total The amounts recorded in operating lease expense include short-term leases, which are immaterial. and Royalty Obligations Year Ended December 31, 2017 Net product sales Cost of product sales Gross profit Year Ended December 31, 2016 Net product sales Cost of product sales Gross profit Year Ended December 31, 2015(1) Net product sales Cost of product sales Gross profit United States Rest-of-World(1) Total(2) We recorded revenue from is as follows: United States Rest-of-World Total Total revenues Cost of product sales Gross profit Net income (loss)(1) Net income (loss) per share—basic Net income (loss) per share—diluted Total revenues Cost of product sales Gross profit Net income(2) Net income per share—basic Net income per share—diluted In which expire in December 2028. We filed our lawsuit within 45 days of receipt of notice from Liquidia of its NDA filing. As a result, under the Hatch-Waxman Act, the FDA plaintiffs’ claims in the amended complaint, including the new antitrust claims. Smiths Medical also filed a motion to dismiss the plaintiffs’ claims against Smiths Medical. On September 23, 2022, the court dismissed all of the plaintiffs’ claims against us and Smiths Medical without prejudice. manufacturers also announced their own policies aimed at stemming 340B program abuses. defend our 340B program contract pharmacy policies. Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers, and Corporate Governance Sustainability Martine Rothblatt, Ph.D., J.D., M.B.A. Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Equity compensation plan approved by security holders(1) Total Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Exhibits and Financial Statement Schedules Summarythea federal program that is administered by the federal government that provides covered health care benefits to senior citizensindividuals age 65 or over and to certain disabled and chronically ill persons. Medicaid is the federal program jointly funded and administered by the statesWe are required to provide health care benefitsaverage sales price (ASP) information for certain of our products to participants who qualifyCMS on a quarterly basis. The ASP we report must be calculated based on income. a statutorily-defined formula as well as regulations and interpretations of the statute by CMS. The ASP information is used by CMS to compute Medicare reimbursement rates for our drugs that are covered by Medicare Part B, which covers physician-administered drugs, physician services, and outpatient care. Medicare Part A covers inpatient hospital benefits, while Medicare Part D is a voluntary outpatient prescription drug benefit to Medicare beneficiaries.A, which covers inpatient hospital benefits.A. However, because Unituxin is indicated for the treatment of a pediatric cancer, Medicare beneficiaries areis unlikely to receive this treatment. cover treatment, but Medicaid may cover pediatric patients requiring care.reimbursed by thereimbursable under Medicare Part B program, which covers physician services and outpatient care.B. The Medicare Part B contractors who administer the program provide reimbursement forcover Remodulin and Tyvaso under local coverage determinations and provide reimbursement according to statutory guidelines. As24 United Therapeutics, a public benefit corporation conditionvariety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients. The 340B ceiling price is calculated using a statutory formula, which is based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate program, and in general, products subject to Medicaid price reporting and rebate obligations are also subject to the 340B ceiling price calculation and discount requirement.inclusion340B ceiling price and the imposition of Adcircacivil monetary penalties on manufacturers that knowingly and Orenitramintentionally overcharge covered entities. Moreover, HRSA established an administrative dispute resolution (ADR) process for claims by covered entities that a manufacturer engaged in overcharging, and by manufacturers that a 340B covered entity violated the prohibitions against diversion or duplicate discounts. Such claims are to be resolved through an ADR panel of government officials rendering a decision that could be appealed only in federal court. An ADR proceeding could potentially subject us to discovery by covered entities and other onerous procedural requirements and could result in additional liability. Further, legislation may be introduced that, if passed, would further expand the 340B program to additional covered entities, expand manufacturer ceiling price obligations to so-called “contract pharmacies,” or require participating manufacturers to agree to provide 340B discounted pricing on drugs used in an inpatient setting. Any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount could affect our 340B ceiling price calculations and negatively impact our results of operations.2022 Annual Report 25 which provideswith a voluntary outpatient prescription drug benefit, wenew discounting program (beginning in 2025). The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. For that and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.rebates to Medicare Part D plan sponsors that reimburse these products. State Medicaid programs also reimburse the cost of our commercial products at rates established by statutory guidelines. Because Remodulin, Tyvaso, Adcirca, Orenitram and Unituxin are reimbursed by state Medicaid programs we must pay a rebate to those state Medicaid programs. We are required by government contract to sell our commercial products under contracts with the Department of Veterans Affairs, Department of Defense, Public Health Service and numerous other federal agencies as well as certain hospitals that are designated as 340B covered entities (entities designated by federal programs to receive drugs at discounted prices) at prices that are significantly below the price we charge to our specialty distributors. These programs and contracts are highly regulated, are subject to regulatory changes and amendments that we cannot control, and impose restrictions on our business. Failure to comply with these regulations and restrictionswill be eliminated, which could result in increased Medicaid rebate liability for us.lossfinal rule and guidance concerning two new pathways for importing lower-cost drugs into the United States. The final rule allows certain prescription drugs to be imported from Canada, and the guidance describes procedures for drug manufacturers to facilitate the importation of our abilityFDA-approved drugs and biologics manufactured abroad and originally intended for sale in a foreign country into the United States. More recently, the Biden administration has reaffirmed its aim to continue receiving reimbursement for our drugs, exclusiontake further action with respect to the pharmaceutical industry, beyond implementation of our products from reimbursement under the federal healthcare programs, or debarment, and expose us to liability under federal and state false claims laws. We estimate that between 40-50 percent of Remodulin, Tyvaso, Adcirca and Orenitram sales are reimbursed under the Medicare and Medicaid programs.healthcare program anti-kickback statuteAnti-Kickback Statute (AKS) prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of, or referring an individual for the furnishing of, any healthcare item or service reimbursable under Medicare, Medicaid, or other federally financed healthcare programs. This statute has been interpreted broadly to apply to arrangements between pharmaceutical manufacturers and prescribers, purchasers, formulary managers, and others. The term “remuneration” has been broadly interpreted to apply to anything of value including, for example, gifts, cash payments, donations, waivers of payment, ownership interests, and providing any item, service, or compensation for something other than fair market value. Liability under the AKS may be established without proving actual knowledge of the statute or specific intent to violate it. Although there are a number of statutory exceptions and regulatory safe harbors to the AKS protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration to those who prescribe, purchase, or recommend pharmaceutical and biological products, including certain discounts, or engaging such individuals as consultants, advisors, and speakers, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor. Moreover, some common practices do not have dedicated safe harbors. The regulatory safe harbors also are subject to regulatory revision and interpretation by a number of government agencies. Violations of the anti-kickback statuteAKS are punishable by imprisonment, criminal fines, damages, civil monetary penalties, exclusion from participation in federal healthcare programs, and liability under the False Claims Act. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exemptionsand safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor. In addition, although the Office of Inspector General of the Department of Health and Human Services (OIG) issues guidance and advisory opinions regarding compliance with the anti-kickback statute, and applicable exemptions and safe harbors, such guidance and opinions may change over time. The federal civil False Claims Act (to the federalof government funds, or making, or causing to be made, a false statement material to a false or fraudulent claim.26 United Therapeutics, a public benefit corporation False Claims ActFCA for, among other things, allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates; for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product; for violating the anti-kickback laws;AKS; materially deviating from statutorily required manufacturing standards; and on the basis of allegations relatingrelated to certain marketing practices, including off-label promotion. The majority ofFCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per violation, as well as potential exclusion from participation in federal healthcare programs.federal anti-kickback statuteAKS and False Claims Act,the FCA, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. SanctionsSeveral states have enacted legislation requiring pharmaceutical companies to, among other things, establish marketing compliance programs; file periodic reports with the state, including reports on gifts and payments to individual health care providers; make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities; and/or register their sales representatives. Some states prohibit certain sales and marketing practices, including the provision of gifts, meals, or other items to health care providers, and still others prohibit offering co-pay support to patients for certain prescription drugs.these federalMedicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments and state laws mayother transfers of value to physicians (defined to include treble damages, civil penalties, exclusiondoctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers are also required to report information regarding payments and transfers of a manufacturer's products from reimbursement under government programs, criminal fines,value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and imprisonment.(FCPA), the UK Bribery Act, and the federal Civil Monetary Penalties Law.(PDMA)(PDMA) imposes requirements and limitations upon the distribution of drugs and drug samples, and prohibits states from licensing distributors of prescription drugs unless the state licensing program meets certain federal guidelines that include minimum standards for storage and handling, as well as record keeping requirements for information regarding sample requests and distribution. The PDMA sets forth civil and criminal penalties for violations. In addition, PDMA requires manufacturers and distributors to submit similar drug sample information to the FDA.Patient Protection and Affordable Care Actprovision of 2010 (PPACA) The PPACAbenefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products, which is intended to expand healthcare coverage withinprohibited in the United States. Several provisionsEU, is governed by the national anti-bribery laws of the law, which have varying effective dates, have impacted usEU member states. Violation of these laws could result in substantial fines and have increased certainimprisonment. Certain EU member states, or industry codes of our costs. The PPACA imposes an annual fee on pharmaceutical manufacturers, based on the manufacturer's sale of branded pharmaceuticals and biologics (excluding orphan drugs) to certain U.S. government programs during the preceding year; expands the 340B drug discount program (excluding orphan drugs) including the creation of new penalties for non-compliance; includes a 50 percent discount on brand name drugs for Medicare Part D participants in the coverage gap, or "donut hole"; and revised the definition of "average manufacturer price" for reporting purposes, which could increase the amount of the Medicaid drug rebates paid to states. In addition, the PPACA imposes new annual reporting requirements for pharmaceutical, biological and device manufacturers with regard toconduct, require that payments or other transfers of value made to physicians be publicly disclosed. Moreover, agreements with physicians must often be the subject of prior notification and teaching hospitals. In addition, pharmaceutical, biological and device manufacturers are required to report annually investment interests heldapproval by physicians and their immediate family members during the preceding calendar year. Many of these laws and regulations contain ambiguous requirements that have not yet been clarified. Further,physician’s employer, his/her competent professional organization, and/or the PPACA amends the intent requirementcompetent authorities of the federal anti-kickback and criminal health care fraud statute. A personindividual EU member states. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines, or entity no longer needs to have actual knowledge of these statutes or specific intent to violate them. In addition, the government may assert that a claimincluding items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act. In December 2017, Congress repealed a PPACA requirement that individuals obtain healthcare insurance coverage or face a penalty, which could decrease the number of patients who have coverage under health plans that pay for patient use of our products.on December 13,in 2016, contains a wide range of provisions designed to promote clinical research and streamline and expedite the FDA review and approval process. For example, the law clarifies the FDA'sFDA’s authority regarding drugs that target rare diseases, and broadens the type of data and information that may be used to support a drug or biologic application for a genetically targeted drug or variant protein targeted drug. The law requires the FDA to facilitate development programs for, and provides expedited review of, regenerative advanced therapies. The law further requires the FDA to establish a program to evaluate the use of real worldreal-world evidence, i.e., evidence from sources other than randomized clinical trials, to support the approval of certain drug and biological product applications and to satisfy post-approval requirements.requirements; in 2018, the FDA published a framework for evaluating real-world evidence. In 2019, the FDA announced numerous initiatives and guidance documents intended to improve and streamline the drug approval process. For example, the FDA’s “Safety and Performance Based Pathway” final guidance described an optional premarket process for certain well-understood medical devices. Other key provisions relatingrelated to orphan drugs, combination products, and medical devices, are discussed separately above.2022 Annual Report 27 If not preempted by the PPACA, severalrelatingrelated to the marketing and promotion of pharmaceutical products and to report gifts and payments to healthcare practitioners in those jurisdictions.jurisdictions, or to obtain licenses for sales representatives and require them to satisfy educational and other requirements. Some of these jurisdictions also prohibit various marketing related activities. Still other states require the postingdisclosure of information relatingrelated to drug pricing and clinical studies and their outcomes. In addition, certain states require pharmaceutical companies to implement compliance programs or marketing codes and several other states are considering similar proposals. Compliance with these laws is difficult and time consuming, and companies that do not comply with these state laws face civil penalties or other civil enforcement action.28 United Therapeutics, a public benefit corporation relatingrelated to data privacy and protection, safe working conditions, laboratory practices, use of animals in research and development activities, and the purchase, storage, movement, import, export, and use and disposal of hazardous or potentially hazardous substances. Antitrust and competition laws may restrict our ability to enter into certain agreements involving exclusive license rights. Future legislation and administrative action will continue to affect our business, the extent and degree of which we cannot accurately predict.Employeeshad approximately 800are subject to a number of laws and regulations that require compliance with federal, state, and local regulations for the protection of the environment. We believe that our operations comply in all material respects with such applicable laws and regulations. Our compliance with these requirements did not change during the past year, and is not expected to have a material effect upon our capital expenditures, cash flows, earnings, or competitive position.aswhom we call “Unitherians,” are mission critical to these commitments because they share the same passion and dedication to meeting our purpose. As of December 31, 2017. The success2022, we had approximately 985 employees working across our 10 facilities worldwide. None of our businessemployees are covered by a collective bargaining agreement and we believe our overall relations with our employees are good.highly dependentproud to be an equal opportunity employer, and does not discriminate based on attractingrace, religion, national origin, gender, age, marital status, disability, pregnancy, sexual orientation, gender identity or expression, military and retaining highlyveteran status, or any other basis protected by applicable law. We have a policy that prohibits all forms of unlawful harassment and retaliation and provide training to all Unitherians on their responsibilities and protections under this policy.2022 Annual Report 29 qualified personnel.Industry Segmentswho will thrive in our unique culture. We provide Unitherians with a variety of personal and Geographic Areas Since 2011,professional development opportunities for them to grow and thrive. We believe that our recruitment, talent management, and talent development efforts are key factors in our low turnover compared to our industry peer group, which historically has trended well below the industry average. In 2022, we continued that trend with our voluntary turnover at 8.8 percent, well below industry average of 16.1 percent (based on June 1, 2021 through June 1, 2022 data from Aon/Radford’s has been pharmaceuticals,goals, add value to the organization, and correspond with the employees’ own career development plans. In addition, we encourage Unitherians to provide input on our programs and speak up when they identify concerns, and we take action in response when appropriate. Our regular town hall meetings, which feature executive updates and patient-focused sessions, provide an avenue for Unitherians to connect with company management and the patient experience. Through Workplace by Facebook, we closelycreated an internal social environment to connect Unitherians across functions. We regularly conduct broad surveys to solicit the views of Unitherians, which give us insights that help us evolve our programming, monitor the revenuesquality of our initiatives, and gross margins generated bymeasure engagement. The impacts of our commercial products. We sell our productsefforts are evident in the results of a recent external engagement survey conducted by Great Place to Work, which showed that approximately 93 percent of respondents consider United StatesTherapeutics “a great place to work.”throughoutSafety. We are committed to providing and maintaining a safe, healthy, and secure workplace for all Unitherians. We have an environmental health and safety program. We routinely provide training on workplace safety and security to all Unitherians.resthigh value we place on the financial, mental, and physical wellness of Unitherians. Our comprehensive total rewards package includes a competitive base salary, short-term cash incentive compensation, stock awards, and an employee stock purchase plan, which encourages all of our full-time Unitherians to participate in our financial success. For example, all full-time domestic Unitherians are eligible to receive minimum annual compensation of $75,000, including salary and bonus. We offer market-leading benefit programs, including a 401(k) savings plan with a company match, as well as health and welfare benefits such as flexible spending accounts, generous paid time off, parental bonding leave, employee assistance programs, flexible work arrangements, tuition assistance, and more. We offer competitive medical, dental, vision, and prescription coverage that is available to both part-time and full-time Unitherians. Our inspiring work environments include several employee-focused amenities, such as on-site cafeterias, childcare centers, and state-of-the-art fitness centers.world. The information required by Item 101(b) and 101(d) of Regulation S-K relating to financial information about industry segments and geographical areas, respectively, is contained in Note 14—Segment Information to our consolidated financial statements.full Board.internetInternet website as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission (SEC)(SEC). They are also available through the SEC athttp://www.sec.gov/edgar/searchedgar/companysearch.html.30 United Therapeutics, a public benefit corporation OF THE REGISTRANT21, 2018,22, 2023, setting forth certain information regarding our executive officers. Each executive officer holds office until the first meeting of the Board of Directors after the annual meeting of shareholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Each executive officer'sofficer’s employment will end pursuant to the terms of his or her employment contract.NameAgePositionAge Position Martine A. Rothblatt, Ph.D., J.D., M.B.A. 68 63Chairman,Chairperson and Chief Executive Officer and Director51 46President and Chief Operating Officer 55 50Chief Financial Officer and Treasurer 59 54Executive Vice President, General Counsel, and Corporate Secretary A. Rothblatt, Ph.D., J.D., M.B.A., founded United Therapeutics in 1996 and has served as ChairmanChairperson and Chief Executive Officer since its inception through January 2015, wheninception. Previously, she became Chairman and Co-Chief Executive Officer. She was promoted to her current role as Chairman andsoul CEO in June 2016. Prior to United Therapeutics, she founded and served as Chairman and Chief Executive Officer of SiriusXM Satellite Radio.created the satellite radio company SiriusXM. She is an inventor or co‑inventor on nine U.S. patents, with additional patents pending. Her pioneering book, Your Life or Mine: How Geoethics Can Resolve the Conflict Between Private and Public Interests in Xenotransplantation, anticipated the need for both global virus bio-surveillance and a co-inventor on sixgreatly expanded supply of our patents pertaining to treprostinil.Development. In this role, he was responsible for most companywide administrative functions, including human resources, information technology, corporate real estateDevelopment, and risk management, and was also responsible for many of our business development efforts and oversight of several of our key collaborations. He was promoted to President and Chief Operating Officer in June 2016, when he also became2016. He is responsible for all of our commercial, and medical affairs, activities.2022 Annual Report 31 ITEMRISK FACTORSForward-Looking Statements This Report contains forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 (the Exchange Act) and the Private Securities Litigation Reform Act of 1995. These statements, which are based on our beliefs and expectations as to future outcomes, include, among others, statements relating to the following:
Risk FactorsThese statements are subject to risks and uncertainties and our actual results may differ materially from anticipated results. Factors that may cause such differences include, but are not limited to, those discussed below. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.BusinessRemodulin, Tyvaso, Orenitram and Adcircaour treprostinil-based therapies to generate revenues and support our operations.current PAHtreprostinil-based therapies (Remodulin,— Tyvaso, Tyvaso DPI, Remodulin, and Orenitram and Adcirca)— comprise the vast majority of our revenues. DecreasedSubstantially decreased sales of any one of these products could have a material adverse impact on our operations. A wide variety of events, such as withdrawal of regulatory approvals or substantial changes in prescribing practices or dosing patterns, many of which are described in other risk factors below, could cause sales of these products to materially decline, or to grow more slowly than expected. Generic competition due to theThe current commercial availability of generic sildenafil, potential commercialand expected availability of generic versions of Adcirca following loss of regulatory exclusivity in May 2018, as well as generic versions of Remodulin, which could be launched in the United States by Sandoz in June 2018our products has decreased and by Teva, Par and Dr. Reddy's in December 2018, and a generic version of Orenitram, which could be launched in the United States by Actavis in June 2027, respectively, or earlier under certain circumstances, and other generic challenges against Remodulin, Tyvaso and Orenitram, may alsocontinue to decrease our revenues. In addition, the inabilityThe approval of new therapies may negatively impact sales of our current and potential new products. Sales may decrease if any third party that manufactures, markets, distributes, or sells any of our commercial products to perform these functionscannot do so satisfactorily, or our inability towe cannot manage our internal manufacturing processes,processes. Finally, if demand for Tyvaso DPI does not meet our expectations, the revenue opportunity for our treprostinil products could result in an inability to meet patient demand and decrease sales.obtain or maintain FDA and international regulatory approvals and will be unable to sell those products. regulatory approvals from the FDA and international regulatory agencies to sell new products, or to expand the product labeling for our existing products, to new indications, we must conduct clinical trials demonstrating that our products are safe and effective. These regulatorsRegulators have substantial discretion over the approval process for our products, and may not agree that we have demonstrated the requisite level of product safety and efficacy to grant approval. The FDA and other regulatory agenciesprocess. Regulators may require us to amend ongoing trials or perform additional trials, beyond those we planned, which have in the past and could in the future result in significant delays and additional costs orand may be unsuccessful. For example, approval of an NDADelays and costs associated with regulatory requirements to change or add trials have sometimes caused us to discontinue efforts to develop a BLA could be delayed ifparticular product, and may do so again in the FDA determines that it cannot review or approve the application as submitted. In such a case, the FDA may require substantial additional studies, testing or information in order to complete its review of the application.future. If our clinical trials are not successful, or we fail to address any identified deficiencies adequately, we will not obtain required approvals to market the new product or new indication. In addition, we are conducting two pivotal clinical studies, referred to in this Report asFREEDOM-EV andBEAT, in which we are attempting to demonstrate that the drug combination being studied delays time to clinical worsening. We have not previously conducted a pivotal clinical study with time to clinical worsening as its primary endpoint. The timing to complete these studies is subject to uncertainty, in part because study completion depends on the accrual of a pre-specified number of clinical worsening events, the pace of which is inherently difficult to predict. Our inexperience with this type of trial design may impact our ability to conduct these trials appropriately and achieve positive results, or to complete the trials within our anticipated timetable. In particular, failure of theFREEDOM-EV study to meet its primary endpoint could materially limit the commercial potential of Orenitram and impede our growth.the length of timehow long it will take, or how much it will cost, to complete necessary clinical trials or obtain regulatory approvals relating toof our current or future products. The length of time we needand cost needed to complete clinical trials and obtain regulatory approvals varies by product, indication, and country.
GCP) regulations and similar regulations outside the United States;andor newly developed drugs or products, or the companies that develop and market them.MostSome of these competitors have substantially greater financial, marketing, manufacturing, sales, distribution, and technical resources, and a larger number of approved products, than we do. TheseSome of these competitors also possess greater experience in areas critical to success such as research and development, clinical trials, sales and marketing, and regulatory matters.therapies, and others are under development.therapies. For example, for the treatment of PAH, we compete with Adempas®, Flolan®, Ilomedin®, Letairis®, Opsumit®, Revatio®, Tracleer®, Uptravi®, Veletri®, Volibris®, Ventavis®, generic epoprostenolover fifteen branded and generic sildenafil citrate.drugs. Sales of a generic version of Adcirca launched in August 2018 have had a material adverse impact on our sales of Adcirca. The availability of generic versions of Remodulin in the United States could materially impact our revenues, and generic competition has materially impacted our Remodulin revenues outside the United States. Our competitors may introduceare also developing new products that render all or some of our technologies and products obsolete or noncompetitive.may compete with ours. For example, Uptravi was approved by the FDA in December 2015 for the treatment of PAH,Liquidia and competes directly with Orenitram. Our commercial therapies may also have toMerck are developing Yutrepia and sotatercept, respectively, which if successful would compete with investigational products currently in development, such as Trevyent®, which is a single-use, pre-filled pump being developed by SteadyMed to deliver a two-day supply of treprostinil subcutaneously using SteadyMed's PatchPump® technology. Trevyent has been granted orphan drug designation by the FDA for the treatment of PAH. As a result, if Trevyent obtains FDA approval prior to FDA approval of RemUnity (our pre-filled, semi-disposable treprostinil delivery system), SteadyMed could have seven years of exclusivity during which the FDA may be prevented from approving these products except in limited circumstances such as a showing of clinical superiority. In addition, we may not compete successfully against generic competitors, as we anticipategeneric tadalafil may be launched in mid-2018, and generic treprostinil may be launched in 2018, as described elsewhere in this Report. It is unclear what revenues, if any, we will generate from Adcirca sales after loss of regulatory exclusivity in May 2018. Legislation such as the 21st Century Cures Act, which was enacted in December 2016 and designed to encourage innovation and bring pharmaceutical products to market more quickly, may enable our competitors to bring competing products to market on an expedited basis. In addition, alternative approaches to treating chronic diseases, such as gene therapy, cell therapy or transplantation technologies, may make our products obsolete or noncompetitive. treprostinil-based products.Alternatively, doctorsDoctors may reduce the prescribed doses of our products if they prescribe them in combination with competing products. In addition, many competing therapies are less invasive or more convenient than Tyvasoour products, and Remodulin, and the use of these products may delaycompeting therapies often delays or preventprevents initiation of Tyvaso or Remodulin therapy. Any of these circumstances could negatively impact our operating results.Salestherapies.32 United Therapeutics, a public benefit corporation are subject todepends on the availability of coverage and adequacy of reimbursement from government agenciesthird-party payers, including governmental authorities and other third parties.private health insurers. Pharmaceutical pricing and reimbursement pressures may negatively impact our sales.the availability of reimbursementscoverage by governmental payers such as Medicare and Medicaid, and private insurance companies. An estimated 40-50 percent of Remodulin, Tyvaso, Adcirca and Orenitram sales in the United States are reimbursed under the Medicare and Medicaid programs. A reduction in the availability or extent of reimbursement from domestic or foreign government health care programs could have a material adverse effect on our business and results of our operations. In the United States, the European UnionGovernment payers and other potentially significant markets for our products, government payers and/or third-party payers are increasingly attempting to limit or regulate the price of medicinal products and frequently challenge the pricing of new andor expensive drugs. Financial pressures may cause United States government or other third-party payers to seek cost containment more aggressively through mandatory discounts or rebates on our products, policies requiring the automatic substitution of generic products, more rigorous requirements for initial reimbursement approvals for new products or other similar measures. For example, there have been proposals to reduce reimbursement rates and/or adopt mandatory rebates under Medicare Part B, which covers Remodulin and Tyvaso. In January 2017, the Medicare Prescription Drug Price Negotiation Act was proposed in Congress; this act would require the federal government to negotiate the price of Medicare prescription drugs with pharmaceutical companies. In October 2017, the Medicare Drug Price Negotiation Act of 2017 was proposed in Congress, with similar requirements. More recently, in November 2017, CMS announced a Final Rule that would adjust the applicable payment rate as necessary for certain separately payable drugs and biologicals acquired under the 340B Program from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent.(Remodulin,(Tyvaso, Tyvaso DPI, Remodulin, and Orenitram) and our oncology product (Unituxin) are expensive therapies. Consequently, itSpecialty pharmacy distributors may not be difficult for our distributorsable to obtain adequate reimbursement for our products from commercial and government payers to motivate such distributorsthem to support our products. Alternatively, third-partyThird-party payers may reduce the amount of reimbursement for our products based on changes in pricing of other therapies for the same disease. In addition, third-partydisease or the development of new payment methodologies to cover and reimburse treatment costs, such as the use of cost-effectiveness research or value-based payment contracts. Third-party payers mayoften encourage the use of less-expensive generic alternative therapies, following the launch of generic forms ofwhich has materially impacted our Adcirca revenues and which may materially impact our Remodulin (anticipated in June 2018) and Adcirca (anticipated in May 2018).revenues. If commercial and/or government payers do not approvecover our products for reimbursement, or limit reimbursements,payment rates, patients and physicians could choose covered competing products that are approved for reimbursement or provideand may have lower out-of-pocket costs.Patient assistance programs for pharmaceutical products have come under increasing scrutiny by governments, legislative bodies and enforcement agencies. These activities may result in actions that have the effect of reducing prices or demand for our products, harming our business or reputation, or subjecting us to fines or penalties. Recently, there has been enhanced scrutiny of company-sponsored patient assistance programs, including insurance premium and co-pay assistance programs and manufacturers' donations to third-party charities that provide such assistance. If we, our vendors or donation recipients, are deemed to have failed to comply with relevant laws, regulations or government guidance in any of these areas, we could be subject to criminal and civil sanctions, including significant fines, civil monetary penalties and exclusion from participation in government healthcare programs, including Medicare and Medicaid, and burdensome remediation measures. Actions could also be brought against executives overseeing our business or other employees. In December 2017, we entered into a civil Settlement Agreement with the DOJ and the OIG. The Settlement Agreement relates to a May 2016 subpoena from the DOJ requesting documents regarding the Company's support of 501(c)(3) organizations that provide financial assistance to patients. Other companies received similar inquiries as part of a DOJ investigation regarding whether that support may violate the Federal Anti-Kickback Statute and the Federal False Claims Act. In connection with the civil settlement, we also entered into a Corporate Integrity Agreement (the CIA) with the OIG, which requires us to maintain our corporate compliance program and to undertake a set of defined corporate integrity obligations for a period of five years from the date the agreement was signed. We may be required to incur significant future costs to comply with the CIA. It is possible that any actions taken by the DOJ as a result of this industry-wide inquiry could reduce demand for our products and/or reduce coverage of our products, including by federal health care programs such as Medicare and Medicaid and state health care programs. If any or all of these events occur, our business, prospects and stock price could be materially and adversely affected. growing demand. We manufacture Remodulin, Orenitram, Tyvaso, and Unituxin, including the active ingredient in each of these products, at our own facilities and rely on third parties for additional manufacturing capacity for Remodulin and Tyvaso. We rely entirely on MannKind to manufacture Tyvaso DPI, Minnetronix Inc. as the sole manufacturer ofto manufacture the Tyvaso Inhalation System, and on Lilly asDEKA to manufacture the sole manufacturer of Adcirca. In addition, once we launch the Implantable SystemRemunity Pump for Remodulin, and we will rely on Medtronica variety of other third-party sole manufacturers for certain elements of our commercial and development-stage products, as detailed under the sole manufacturer of the SynchroMed II infusion system and related components usedrisk factor below entitled, We rely in the Implantable System for Remodulin.In addition, any changeChanges in suppliers and/or service providers could interrupt the manufacturing of our commercial products and impede the progress of our commercial launch plans and clinical trials. In addition, ourFor example, Remodulin, Tyvaso and Unituxin are sterile solutions that must be prepared under highly-controlled environmental conditions, which are challenging to maintain on a commercial scale. In addition, Unituxin is a monoclonal antibody. As with all biologic products, monoclonal antibodies are inherently more difficult to manufacture than our treprostinil-based products and involve increased risk of viral and other contaminants. We manufacture allour entire supply of our Orenitram and Unituxin ourselves, and we do not havewithout an FDA-approved back-up manufacturing site, for these products. We are constructing a new facility to expand our manufacturing capacity for dinutuximab, the active ingredient in Unituxin, but this process will take several years and maydo not besuccessful at all. We presently have no plansplan to engage a third-party contract manufacturer for dinutuximab drug substance, although we are in the process of qualifying a third-party manufacturer for finished Unituxin drug product. We presently have no plansthird party to engage a third-party contract manufacturer for Orenitram.manufacture these materials. Our long-term organ manufacturing programs will involve exceptionally complicated manufacturing processes, many of which have never been attempted on a clinical or commercial scale. It will take substantial time and resources to develop and implement such manufacturing processes, orand we may never be able to do so successfully.we face withof our manufacturing strategy include the following: and our third-party manufacturers, and other third parties involved in the manufacturing process, such as third parties that operate testing and storage facilities, are subject to the FDA'sFDA’s current good manufacturing practices regulations, current good tissue practices, and similar international regulatory standards.standards, and other quality standards related to device manufacturing. Our ability to exercise control over regulatory compliance by our third-party manufacturers is limited;products;disruption—for example, Medtronic and Lilly manufacture the Synchromed II pump and Adcirca, respectively, at their facilities in Puerto Rico, which is vulnerable to hurricanes;and our third-party manufacturers, and other third parties involved in the manufacturing process comply with applicable drug and device manufacturing regulations, the sterility and quality of our products could be substandard and such products could not be sold or used or could be subject to recalls;inspections. Furthermore, ainspections of new manufacturer would have to be familiarized with the processes necessary to manufacture and commercially validatemanufacturers of our products, as producingor new manufacturing facilities we operate.treprostinil-based and biologic products is complex;2022 Annual Report 33 all; and Our ability to generate commercial sales or conduct clinical trials could suffer if our third-party suppliers and service providers fail to perform.pharmacovigilance-relatedpharmacovigilance and product complaint activities, including drug safety, reporting adverse events, and handling product(5)approvals for the devices used to deliver our drugs; and (6) marketing and distributing our products. For risks relating toAny disruption in the involvementability of third parties to continue to perform these critical activities, including as a result of the COVID-19 pandemic, could materially adversely impact our business and results of operations. Any change in service providers could interrupt the manufacture and distribution of our manufacturing process, seeproducts and services, and impede the risk factor above, entitledOur manufacturing strategy exposes us to significant risks. ��progress of our clinical trials, commercial launch plans, and related revenues.Remodulin, Tyvaso, Orenitram and Unituxin. From time-to-time, we increase the price of products sold to our U.S.-based and international distributors. Our price increases may not be fully reimbursed by third-party payers.commercial products. If our distributors do not achieve acceptable profit margins on our products, they mayare unsuccessful in, or reduce or discontinue, the sale of our products. Furthermore, if our distributors devote fewer resources to sell our products or are unsuccessful in their sales efforts, our revenues may decline materially. Outside the United States, we rely substantially on our international distributors to obtain and maintain regulatory approvals for our products and to market and sell our products in compliance with applicable laws and regulations.on Lilly to manufacture and supply Adcirca for us, and we use Lilly's pharmaceutical wholesaler network to distribute Adcirca. If Lilly is unable to manufacture or supply Adcirca or its distribution network is disrupted, it could delay, disrupt or prevent us from selling Adcirca. In addition, Lilly has the right to determine the price of Adcirca. Changes in the price of Adcirca set by Lilly could adversely impact demand or reimbursement for Adcirca. Any change in service providers could interrupt the distribution of our commercial products and our other products and services, and impede the progress of our clinical trials, commercial launch plans and related revenues. We rely heavily on third-party contract research organizations, contract laboratories, clinical investigative sites and other third-parties to conduct our clinical trials, preclinical studies and other research and development activities. In particular, our research and development efforts into new indications for Unituxin are substantially outsourced to a contract research organization called Precision Oncology, LLC. In addition, the success of certain products we are developing will depend on clinical trials sponsored by third parties. Failure by any third party to conduct or assist us in conducting clinical trials in accordance with study protocols, quality controls and GCP, or other applicable U.S. or international requirements or to submit associated regulatory filings, could limit or prevent our ability to rely on results of those trials in seeking regulatory approvals. We relyentirely on third parties to supply pumps and other supplies necessary to deliver Remodulin. There are a limited number of pumps available in the market, and the discontinuation of any particular pump could have a material, adverse impact on our Remodulin revenues if a viable supply of an alternate pump is not available. We rely heavily on Medtronic for Smiths Medical discontinued manufacturing the successMS-3 system used to deliver subcutaneous Remodulin, and specialty pharmacy distributors have informed us that supplies of our programMS-3 pumps are nearly exhausted. Smiths Medical has also announced plans to develop an implantable pumpdiscontinue the CADD Legacy system used to deliver intravenous Remodulin. Historically, these are the pumps primarily used to deliver Remodulin (the Implantable System for Remodulin). In particular, Medtronic is entirely responsible for regulatory approvals and all manufacturing and quality systems related to its infusion pump and related components. Medtronic entered into a consent decree relating to the SynchroMed II implantable infusion pump systems. Medtronic's failure to comply with the ongoing obligations under the consent decree could adversely impact Medtronic's ability to manufacture and supply the Implantable System for Remodulin. Finally, we rely heavily on DEKA for the development of RemUnity, our pre-filled, semi-disposable system for subcutaneous treprostinil.Our operations must comply with extensive laws and regulationspatients in the United StatesStates. In 2021, we launched the Remunity Pump to deliver subcutaneous Remodulin, and other countries, including FDA regulations. FailureSmiths Medical plans to obtain approvalsmake an alternative pump, the CADD Solis, available for intravenous Remodulin. We are also engaged in further efforts to develop alternative pumps to deliver Remodulin. However, if these alternative systems are not seen as adequate substitutes, or are not developed on a timely basis, our sales of Remodulin could be materially, adversely impacted.to achieve continued compliance with these requirementssupply Adcirca or its distribution network is disrupted, it could delay, disrupt, or prevent us from selling34 United Therapeutics, a public benefit corporation commercializationsole manufacturer of the Tyvaso Inhalation System. As Tyvaso is a drug-device combination, we cannot sell Tyvaso without the Tyvaso Inhalation System.products. The productscommercial sales of Tyvaso DPI would be materially and adversely impacted.develop must be approvedalso rely on various sole-source suppliers for marketingmanufacturing activities related to ralinepag, RemoPro, and saleother pumps we are developing for Remodulin. For a further discussion of risks created by regulatory agencies. the use of third-party contract manufacturers, see the risk factor above entitled, Our manufacturing strategy exposes us to significant risks.efforts must comply with extensive regulations, including those promulgatedTableactivities. In addition, the success of Contentsthe FDA and the U.S. Department of Agriculture. The process of obtaining and maintaining regulatory approvals for new drugs is lengthy, expensive and uncertain. The regulatory approval process is particularly uncertain for our transplantation programs, which include the development of xenotransplantation, regenerative medicine, biomechanical lungs and cell-based products. Once approved, the manufacture, distribution, advertising and marketing of our products are subject to extensive regulation, including product labeling, strict pharmacovigilance and adverse event and medical device reporting, complaint processing, storage, distribution and record-keeping requirements. Our product candidates may fail to receive regulatory approval on a timely basis, or at all. If granted, product approvals can be conditioned on the completion of post-marketing clinical studies, accompanied by significant restrictions on the use or marketing of a given product and withdrawn forthird parties. Third-party failure to complyconduct or assist us in conducting clinical trials in accordance with regulatory requirements, such as post-marketing requirements and post-marketing commitments,study protocols, quality controls, GCP, or upon the occurrence of adverse events subsequent to commercial introduction. If data from post-marketing studies suggest that an approved product presents an unacceptable safety risk, regulatory authorities could withdraw the product's approval, suspend production or place other marketing restrictions on that product. We are also required to comply with the corporate integrity obligations set forth in the CIA we entered into in December 2017 for a period of five years from the date the agreement was signed. If we fail to comply with applicable regulatory requirements or the CIA, weto submit associated regulatory filings, could be subject to penalties including fines, suspension of regulatory approvals that cause us to suspend production, distributionlimit or marketing activities, product recalls, seizure of our products and/or criminal prosecution. If regulatory sanctions are applied or regulatory approval is delayed or withdrawn, our operating results and the value of our company may be adversely affected. In addition, our reputation could be harmed as a result of any such regulatory restrictions or actions, and patients and physicians may avoid the use of our products even after we have resolved the issues that led to such regulatory action.Regulatory approval for our currently marketed products is limited by the FDA and other regulators to those specific indications and conditions for which clinical safety and efficacy have been demonstrated. Any regulatory approval of our products is limited to specific diseases and indications for which our products have been deemed safe and effective by the FDA. FDA approval is also required for new formulations and new indications for an approved product. If we are not able to obtain FDA approval for any desired future indications for our products,prevent our ability to effectively market and sell our products may be reduced. While physicians may choose to prescribe drugs for uses that are not described in the product's labeling and for uses that differ from those approved by regulatory authorities (called "off-label" uses), our ability to promote our products is limited to those indications that are specifically approved by the FDA. If our promotional activities fail to comply with regulations or guidelines related to off-label promotion, we may be subject to warnings from, or enforcement action by, these authorities. In addition, failure to follow FDA rules and guidelines relating to promotion and advertising can result in the FDA's refusal to approve a product, suspension or withdrawal of an approved product from the market, product recalls, fines, disgorgement of money, operating restrictions, civil lawsuits, injunctions or criminal prosecution.We must comply with various laws in jurisdictions around the world that restrict certain marketing practices in the pharmaceutical and medical device industries. Failure to comply with such laws could result in penalties and have a material adverse effectrely on our business, financial condition and results of operations. Our business activities may be subject to challenge under lawsthose trials in jurisdictions around the world restricting particular marketing practices such as anti-kickback and false claim statutes, the ForeignCorrupt Practices Act and the UK Bribery Act. Any penalties imposed upon us for failure to comply could have a material adverse effect on our business and financial condition. In the United States, the Federal Anti-Kickback Statute prohibits, among other activities, knowingly and willfully offering, paying, soliciting, or receiving compensation to induce, or in return for, the purchase, lease, order or arranging the purchase, lease or order of any health care product or service reimbursable under any federally financed health-care program. This statute has been interpreted broadly to apply to arrangements between pharmaceutical manufacturers and prescribers, purchasers, formulary managers, patients, and others. The exemptions and safe harbors under this statute may be narrow, and practices that involve compensation may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices do not always qualify for safe harbor protection. The Federal False Claims Act, as amended by the Patient Protection and Affordable Care Act of 2010 (PPACA), prohibits any person from presenting or causing to be presented a false or fraudulent claim or making or causing a false statement material to a false or fraudulent claim. Several pharmaceutical and health care companies have been investigated under this law for allegedly providing free product to customers with the expectation that the customers would bill federal health care programs for the free product. Other companies have been prosecuted for causing false claims to be submitted because of these companies' marketing of a product for unapproved and non-reimbursable uses. Potential liability under the Federal False Claims Act includes mandatory treble damages and significant per-claim penalties. The majority of states also have statutes similar to the Federal Anti-Kickback Statute and the Federal False Claims Act. Sanctions under these federal and state laws may include treble civil monetary penalties, exclusion of a manufacturer's product from reimbursement under state government programs, debarment, criminal fines, and imprisonment. Any investigation, inquiry or other legal proceeding under these laws and relating to our operations may adversely affect our business, results of operations or reputation. The PPACA also imposed reporting requirements for pharmaceutical, biologic and device manufacturers regarding payments or other transfers of value made to physicians and teaching hospitals, including investment interests in such manufacturers held by physicians and their immediate family members during the preceding calendar year. Failure to submit required information may result in civil monetary penalties, which may increase significantly for "knowing failures." Compliance with these and similar laws on a state-by-state basis is difficult and time consuming.Government healthcare reform could adversely affect our revenue, costs and results of operations. Our industry is highly regulated and changes in law may adversely impact our business, operations or financial results. The PPACA is a broad measure intended to expand health care coverage within the United States, primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program. The reforms imposed by the law will significantly impact the pharmaceutical industry; however, the full effects of the PPACA will be unknown until all of these provisions are implemented and the Centers for Medicare and Medicaid Services and other federal and state agencies issue applicable regulations or guidance. Moreover, in the coming years, additional changes could be made to governmental health care programs that could significantly impact the success of our products or product candidates. We may face uncertainties as a result of federal and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the PPACA. There is no assurance that the PPACA, as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.such as sepsis, could cause physicians and patientsour sales to avoiddecrease or discontinue use of our products in favor of alternative treatments.the salesales of our products. An example of a known risk associated with the delivery system used for intravenous Remodulin is sepsis, which is a serious and potentially life-threatening infection of the bloodstream caused by a wide variety of bacteria. Intravenous Remodulin is infused continuously through a catheter placed in a large vein in the patient's chest, and sepsis is a known risk associated with this type of delivery. In addition, Unituxin is associated with severe side effects, and its label contains a boxed warning relatingrelated to potential infusion reactions and neurotoxicity. We are required to report certain adverse events to the FDA. Development of new products, and new formulations and indications for existing products, could result in new side effects and adverse events which may be serious in nature. Concerns about side effects may affect a physician's decisionIf the use of our products harms patients or is perceived to prescribeharm patients, regulatory approvals could be revoked or a patient's willingness to use our products. As is common with pharmaceutical and biotechnology companies, ourin the future could impede the operation of our business.If any of the license or other agreements under which intellectual property rights are licensed to, or were acquired by us, are breached or terminated, our right to continue to develop, manufacture and sell the products covered by such agreements could be impaired or lost. Our business depends upon our continuing ability to exploit our intellectual property rights acquired from third parties under product license and purchase agreements. Under each of our purchase agreements, we have rights to certain intellectual property covering a drug or other product or technology. We may be required to license additional intellectual property owned by third parties to continue to develop and commercialize our products. This dependence on intellectual property developed by others involves the following risks:Our intellectual property rights may not effectively deter competitors from developing competing products that, if successful, could have a material adverse effect on our revenues and profits. The period under which our commercial and developmental therapies are protected by our patent rights is limited. Three of our U.S. patents covering our current methods of synthesizing and producing treprostinil, the active ingredient in Remodulin, Tyvaso and Orenitram, expired in October 2017, and three more will expire in 2028. Our patents relating to our individual treprostinil-based products expire at various times between 2018 and 2031. We settled patent litigation with Sandoz, Teva, Par and Dr. Reddy's, which will permit them to launch generic versions of Remodulin in the United States in June 2018 (Sandoz) and December 2018 (Teva, Par and Dr. Reddy's), although they may be permitted to enter the market earlier under certain circumstances. We also settled patent litigation with Actavis, which will permit Actavis to launch a generic version of Orenitram in the United States in June 2027, although Actavis may be permitted to enter the market earlier under certain circumstances. The U.S. patent for Adcirca for the treatment of pulmonary hypertension expired in November 2017, and FDA-conferred regulatory exclusivity will expire in May 2018. We have no issued patents or pending patent applications covering Unituxin. For further details, please seePart I, Item 1.—Business—Patents and Other Proprietary Rights, Strategic Licenses and Market Exclusivity—Generic Competition. We continue to conduct research into new methods to synthesize treprostinil and have pending U.S. and international patent applications and patents relating to such methods. We also have additional issued and pending patents covering the use of our existing commercial products in new indications and with new devices. However, we cannot be sure that our existing or any new patents will effectively deter or delay competitors' efforts to bring new products to market, or that additional patent applications will result in new patents. Upon the expiration of any of our patents, competitors may develop generic versions of our products and may market those generic versions at a lower price to compete with our products. Competitors may also seek to design around our patents or exclude patented methods of treatment, such as patent-protected indications, from the label for generic versions of our products in an effort to develop competing products that do not infringe our patents. In addition, patent laws of foreign jurisdictions may not protect our patent rights to the same extent as the patent laws of the United States. Third parties are currently, and may in the future, challenge the validity of our patents, through patent litigation and/or initiating proceedings, including re-examinations, IPRs, post-grant reviews and interference proceedings, before the USPTO or other applicable patent filing office, or other means. We are currently involved in litigation challenging several of our patents related to Tyvaso as a result of an ANDA filing by Watson. If Watson receives approval to sell a generic version of Tyvaso and/or prevails in any patent litigation, Tyvaso would become subject to increased competition and our revenue could decrease. In addition, in October 2015, SteadyMed filed a petition forinter partes review with the Patent Trial and Appeal Board (PTAB) of the USPTO seeking to invalidate the claims of one of our patents covering a method of making treprostinil that expires in 2028 and is listed in the Orange Book for Remodulin, Tyvaso, and Orenitram. In March 2017, the PTAB issued a Final Written Decision in connection with the IPR, finding that all claims of the subject patent are not patentable. The United States Court of Appeals for the Federal Circuit affirmed that decision, and in February 2018, we filed a petition for certiorari seeking review of the Federal Circuit decision by the United States Supreme Court. In June 2017, Watson filed petitions forinter partes review of two of our patents listed in the Orange Book for Tyvaso. On January 11, 2018, the PTAB issued decisions to instituteinter partes review proceedings with respect to both patents. For details on the status of these matters, please see Note 16—Litigation, to our consolidated financial statements. Patent litigation can be time consuming, distracting to our operations, costly and may conclude unfavorably for us. In addition, the outcome of patent infringement litigation often is difficult to predict. If we are unsuccessful with respect to any future legal action in the defense of our patents and our patents are invalidated or determined to be unenforceable, our business could be negativelyimpacted. Even if our patents are determined to be valid or enforceable, it is possible that a competitor could circumvent our patents by effectively designing around the claims of our patents. Accordingly, our patents may not provide us with any competitive advantage. In addition to patent protection, we also rely on trade secrets to protect our proprietary know-how and other technological advances that we do not disclose to the public. We enter into confidentiality agreements with our employees and others to whom we disclose trade secrets and other confidential information. These agreements may not necessarily prevent our trade secrets from being used or disclosed without our authorization and confidentiality agreements may be difficult, time-consuming and expensive to enforce or may not provide an adequate remedy in the event of unauthorized disclosure. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such third party, or those to whom they communicate such technology or information, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our business and competitive position could be harmed.Third parties may allege that our products or services infringe their patents and other intellectual property rights, which could result in the payment of royalties. Payment of royalties would negatively affect our profits; furthermore, if we chose to contest these allegations, we could be subject to costly and time-consuming litigation or could lose the ability to continue to sell the related products. To the extent third-party patents to which we currently do not hold licenses are necessary for us to manufacture, use or sell our products, we would need to obtain necessary licenses to prevent infringement. In the case of products or services that utilize intellectual property of strategic collaborators or other suppliers, such suppliers may have an obligation to secure the needed license to these patents at their cost. Otherwise, we would be responsible for the cost of these licenses. Royalty payments and other fees under these licenses would erode our profits from the sale of related products and services. Moreover, we may be unable to obtain these licenses on acceptable terms or at all. If we fail to obtain a required license or are unable to alter the design of the product to avoid infringing a third-party patent, we would be unable to continue to manufacture or sell related products. If a third party commences legal action against us for infringement, we could be compelled to incur significant costs to defend the action and our management's attention could be diverted from our day-to-day business operations, whether or not the action were to have any merit. We cannot be certain that we could prevail in the action, and an adverse judgment or settlement resulting from the action could require us to pay substantial amounts in damages for infringement or substantial amounts to obtain a license to continue to use the intellectual property that is the subject of the infringement claim.claims or losses significantly exceed our liability insurance coverage, we may experience financial hardship or potentially be forced out of business. While we historically have had a limited number of product liability claims, the clinicalClinical testing and eventual marketing and sale of new products, reformulated versions of existing products, or use of existing products in new indications could expose us to new product liability risks.risks that are not covered by our existing policies.ChairmanChairperson and Chief Executive Officer, Dr. Martine Rothblatt, play a critical role in defining our business strategy and maintaining our corporate culture. The loss of the services and leadership of Dr. Rothblatt or any other members of our senior management team could have an adverse effect on our business. We do not maintain key person life insurance on our senior management team members. In addition, effective succession planning is important to our long-term success. Failure to identify, hire, and retain suitable successors for members of our senior management team and to transfer knowledge effectively could impede the achievement of our business objectives. Our future success also depends on our ability to attract and retain qualified scientific and technical personnel. Competition for skilled scientific and technicalsuch personnel in the biotechnology and pharmaceuticalour industries is intense. Furthermore, our compensation arrangements may not be sufficient to attract new qualified scientific and technical employees or retain such core employees. If we fail to attract and retain such employees, whom we call “Unitherians”, we may not be successful in developing and commercializing new therapies for PAHtherapies.diseases.2022 Annual Report 35 36 United Therapeutics, a public benefit corporation 2022 Annual Report 37 38 United Therapeutics, a public benefit corporation substances and wesubstances. We are expanding these activities in both scale and location. In addition, patientsPatients may dispose of our products using means we do not control. Such activities subject us to numerous federal, state, and local environmental and safety laws and regulations that govern the management, storage, and disposal of hazardous materials. Compliance with current and future environmental laws and regulations can require significant costs; furthermore, we can be subject to substantial fines and penalties in the event of noncompliance.costs. The risk of accidental contamination or injury from these materials cannot be completely eliminated. Furthermore, onceOnce chemical and hazardous materials leave our facilities, we cannot control the manner in which such hazardous waste is disposed of by our contractors. In the event of an accident, weWe could be liable for substantial civil damages or costs associated with the cleanup of the release of hazardous materials. Any relatedmaterials and such liability could have a material adverse effect on our business.We may encounter substantial difficulties managing our growth relative to product demand. If we experience substantial sales growth, we may have difficulty managing inventory levels as marketing new therapies is complicated and gauging future demand can be difficult and uncertain until we possess sufficient post-launch sales experience. In addition, we have spent considerable resources building and expanding our offices, laboratories and manufacturing facilities. However, our facilities could be insufficient to meet future demand for our products. Conversely, we may have excess capacity at our facilities if future demand falls short of our projections, or if we do not receive regulatory approvals for the products we intend to manufacture at our facilities. Our ability to satisfactorily recover our investments in our facilities will depend on sales of the products manufactured at these facilities in sufficient volume.If we need additional financing and cannot obtain it, our product development and sales efforts may be limited. We may be required to seek additional sources of financing to meet unplanned or planned expenditures. Unplanned expenditures could be significant and may result from necessary modifications to product development plans or product offerings in response to difficulties encountered with clinical trials. We may also face unexpected costs in preparing products for commercial sale, or in maintaining sales levels of our currently marketed therapeutic products. In addition, our 2016 Credit Agreementcontains affirmative and negative covenants that, among other things, limit our ability to incur additional indebtedness. If we are unable to obtain additional funding on commercially reasonable terms or at all, we may be compelled to delay clinical studies, curtail operations or obtain funds through collaborative arrangements that may require us to relinquish rights to certain products or potential markets. We may require additional financing to meet significant future obligations. For example, our Share Tracking Awards Plan (STAP) awards entitle participants to receive in cash an amount equal to the appreciation in the price of our common stock, which is calculated as the positive difference between the closing price of our common stock on the date of exercise and the date of grant. Consequently, our STAP may require significant future cash payments to participants to the extent the price of our common stock appreciates and the number of vested STAP awards increases over time. If we do not have sufficient funds to meet such obligations or the ability to secure alternative sources of financing, we could be in default, face litigation and/or lose key employees, which could have a material adverse effect on our business.We may not be able to generate sufficient cash to service our indebtedness, which may have a material adverse effect on our financial position, results of operations and cash flows. In addition, we may be forced to take other actions to satisfy our obligations in connection with our indebtedness, which actions may not be successful. We may borrow up to $1.0 billion under the 2016 Credit Agreement, which matures in January 2023. Our ability to make payments on or refinance our debt obligations, including any outstanding balance under the 2016 Credit Agreement, and any future debt that we may incur, will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. Our inability to generate sufficient cash flows to satisfy our debt obligations would materially and adversely affect our financial position and results of operations. If we cannot repay or refinance our debt as it becomes due, we could be forced to take disadvantageous actions, including reducing or delaying investments and capital expenditures, disposing of material assets or operations, seeking additional debt or equity capital or restructuring or refinancing our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such actions may not be sufficient for us to meet any such debt service obligations. In addition, our ability to withstand competitive pressures and to react to changes in our industry could be impaired.Information technology security breaches and other disruptions could compromise our information and expose us to legal responsibility which would cause our business and reputation to suffer. We are increasingly dependent on information technology systems and infrastructure, much of which is outsourced to third parties including in "cloud" based platforms. In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers, customers and business partners, and personally identifiable information. The secure maintenance of this information is critical to our operations and business strategy. We are subject to laws in the United States and abroad, such as the Health Insurance Portability and Accountability Act of 1996 and European Union regulations related to data privacy, which require us to protect the privacy and security of certain types of information. Our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Such breaches could compromise sensitive and confidential information stored on our networks and expose such information to public disclosure, loss or theft. Anyaccess, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disruption of our operations, and damage to our reputation which could adversely affect our business.relatingrelated to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business.noncompliance. For example, patients and others may use social media channels to comment on the effectiveness of a product or to report an alleged adverse event. When such disclosures occur, we may fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend against political and market pressures generated by social media due to restrictions on what we may say about our products. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate comments about us on any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face overly restrictive regulatory actions, or incur other harm to our business.Tax legislation may materially adversely affect us. Tax laws are dynamiccontinually changing as new laws are passed and new interpretationsData Privacylawagreements under which we license or acquired intellectual property rights are issuedbreached or applied.terminated, we could lose our rights to continue to develop, manufacture, and sell the products covered by such agreements.2022 Annual Report 39 Decemberaddition, we may be forced to incur substantial costs to maintain the intellectual property ourselves or take legal action seeking to force the licensor to do so.enacted significant changesand other companies to launch generic versions of Orenitram and Tyvaso in the United States. A U.S. patent for Adcirca for treatment of pulmonary hypertension expired in November 2017, and FDA-conferred regulatory exclusivity expired in May 2018, leading to the launch of a generic version of Adcirca in August 2018. We have no issued patents or pending patent applications covering Unituxin. For further details, please see Part I, Item 1.—Business—Patents and Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights.The Tax Cuts and Jobs Act (Tax Reform), and certain provisionsour products. Competitors may also seek to design around our patents or exclude patented methods of treatment, such as patent-protected indications, from the label for generic versions of our products in an effort to develop competing products that do not infringe our patents. In addition, patent laws of foreign jurisdictions may not protect our patent rights to the same extent as the patent laws of the new lawUnited States.adverselyin the future challenge, the validity of our patents, through patent litigation and/or initiating proceedings, including re-examinations, IPRs, post-grant reviews, and interference proceedings, before the USPTO or other applicable patent filing offices, or other means. For example, Liquidia is challenging various patents related to Tyvaso and our other treprostinil-related patents.us. Many aspectsour profits, subject us to costly and time-consuming litigation, or cause us to lose the ability to sell the related products.new legislationproduct to avoid infringing a third-party patent, we would be unable to continue to manufacture or sell related products.unclearincreasingly dependent on information technology systems and infrastructure, much of which is outsourced to third parties including in “cloud” based platforms. We collect, store, and use sensitive or confidential data, including intellectual property, our proprietary business information and that of our suppliers, customers, and business partners, and personally identifiable information. The secure maintenance of this information is critical to our operations and business strategy. We are40 United Therapeutics, a public benefit corporation not be clarifieddifficult to detect for some time. As a result, our estimateslong periods of the impact of Tax Reformtime, we may be unable to anticipate these techniques or implement adequate preventive measures. Any breaches or failures could compromise sensitive and confidential information stored on our business are subjectnetworks or those of third parties and expose such information to change. In addition, governmental tax authorities are increasingly scrutinizingpublic disclosure, loss, or theft. Any actual or alleged unauthorized access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the tax positionsprivacy of companies. If federal, state or foreign tax authorities change applicable tax laws or issue new guidance,personal information, disruption of our overall taxesoperations, and damage to our reputation, any of which could increase, andadversely affect our business, financial condition, or results of operationsoperations. Costs we may incur as a result of any of the foregoing, could adversely affect our business, financial condition, or results of operations.impacted.
affect our financial position and results of operations. If we cannot repay or refinance our debt as it becomes due, we may be forced to take disadvantageous actions, including reducing or delaying investments and capital expenditures, disposing of material assets or operations, seeking additional debt or equity capital, or restructuring or refinancing our indebtedness. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, such actions may not enable us to meet any such debt service obligations. In addition, our ability to withstand competitive pressures and to react to changes in our industry could be impaired.there can be significant price and volume fluctuations in the market that may not relate to operating performance. The following table sets forth the high and low closing prices of our common stock for the periods indicated: High Low $ 168.42 $ 114.60 $ 155.54 $ 98.33 $ 188.56 $ 119.57 2022 Annual Report 41 estimates or expectations or those of securities analysts;relatingrelated to our products, the launch of generic versions of our products or other competitive products, such as sotatercept or Yutrepia, and the impact of competition from generic and other products on our revenues;developmentsour ongoing patent litigation with respectLiquidia related to the ANDA filed by Watson seekingits NDA for Yutrepia, among others;for a generic version of Tyvaso and to our pending lawsuits defending our patent rights, the IPR petitions submitted by Watson related to twolaunch commercial sales of, our Tyvaso patents, and our pending petition for certiorari seeking review by the United States Supreme Court of the Federal Circuit decision that upheld the decision of the PTAB that all claims of one of our patents (which patent is listed in the Orange Book for Remodulin, Tyvaso and Orenitram) are unpatentable;legislationlaws and regulations affecting reimbursement of, our therapeutic products by Medicare, Medicaid or other government payers, and changes in reimbursement policies of private health insurance companies, and negative publicity surrounding the cost of high-priced therapies;PAH therapies; any other activity which could be viewed as being dilutive to our shareholders;regulatory approvals from the FDAdomestic or international regulatory agencies;holdings; andand our amended and restated certificate of incorporation, fourth amended and restated by-laws, shareholder rights plancharter, bylaws and employment and license agreements, among other things, could prevent or delay a change of control or change in management that may be beneficial to our public shareholders.and our amended and restated certificate of incorporation, fourthand our ninth amended and restated by-laws and shareholder rights planbylaws may prevent, delay, or discourage:amended and restated certificate of incorporation dividesconversion to a PBC, our Board is required to consider and balance the financial interests of Directors into three classes. Membersshareholders, the interests of each class are elected for staggered three-year terms.stakeholders materially affected by our conduct, and the pursuit of our specific public benefit purpose when evaluating takeover offers. This provisionrequirement of Delaware PBC law may make it more difficult for shareholders to replace the majority of directors. It may also deter the accumulation of large blocks of our common stock by limiting the voting power of such blocks.also result in an acceleration ofaccelerate the vesting of outstanding STAP awards, stock options, and restricted stock units. This, together with anyAny increase in our stock price resulting from the announcement of a change of control, and our broad-based change of control severance program, under which Unitherians may be entitled to severance benefits if they are terminated without cause (or they terminate their employment for good reason) following a change of control, could make an acquisition of our company significantly more expensive to the purchaser. We also have a broad-based change of control severance program, under which employees may be entitled to severance benefits in the event they are terminated without cause (or they terminate their employment for good reason) following a change of control. This program could also increase the cost of acquiring our company.thesethe agreements, plus a specified period thereafter. We are also party to certain license agreements that restrict our ability to assign or transfer the rights licensed to us to third parties, including parties with whom we wish to merge, or those attempting to acquire us. These agreements often require that we obtain prior consent of the counterparties to these agreements if we contemplate a change of control. If these counterparties withhold consent, related agreements could be terminated and we would lose related license rights. For example, both Lilly and Toray Industries, Inc.MannKind have the right to terminate our license agreements relatingrelated to Adcirca and esuberaprost,Tyvaso DPI, respectively, in the event of certain change of control transactions. These restrictive change of control provisions could impede or prevent mergers or other transactions that could benefit our shareholders.Because we do not intend to pay cash dividends, ourdeclared or paid, cash dividends on our common stock. Furthermore, weand do not intend to pay, cash dividends in the future and our 2016dividends. Our 2022 Credit Agreement contains covenants that may restrict us from doing so. As a result, the return on an investment in our common stock will dependdepends entirely upon the future appreciation, if any, in the price of our common stock.42 United Therapeutics, a public benefit corporation canis uncertainty as to whether a court would enforce this provision. If a court ruled the choice of forum provision was inapplicable or unenforceable in an action, we may incur additional costs to resolve such action in other jurisdictions. Our choice of forum provision is intended to apply to the fullest extent permitted by law to the above-specified types of actions and proceedings, including any derivative actions asserting claims under state law or the federal securities laws. Our shareholders will not be no assurancesdeemed, by operation of the choice of forum provision, to have waived our obligation to comply with all applicable federal securities laws and the rules and regulations thereunder.commonconversion to a PBC is in the best interest of shareholders, our status as a PBC may not result in the benefits that we anticipate. For example, we may not be able to achieve our public benefit purpose or realize the expected positive impacts from being a PBC.will provideprice. In addition, Delaware's PBC statute may be amended to require more explicit or burdensome reporting requirements that could increase the time and expense required to comply.returnDelaware PBC, we may be subject to investors.increased litigation risk.ITEMUNRESOLVED STAFF COMMENTS2022 Annual Report 43 ITEMPROPERTIESand occupy a 232,000415,000 square foot combination laboratory and office building complex in Silver Spring, Maryland that serves as our co-headquarters, and is used for commercial manufacturing.to manufacture our products, and houses one of our ex vivo lung perfusion centers. These manufacturing activities include the synthesis of treprostinil, the active ingredient in RemodulinTyvaso, Tyvaso DPI, and Tyvaso,Remodulin, and treprostinil diolamine, the active ingredient in Orenitram, as well as dinutuximab, the active ingredient in Unituxin. We also manufacture finishedTyvaso, Remodulin, Tyvaso and Unituxin drug product in our Silver Spring complex. We own several other buildings in Silver Spring used principallyIn 2019, we completed construction of a new cell culture and purification facility. In early 2021, we decided to repurpose this facility to produce manufactured lungs for office and laboratory space. We are constructing a 29,000 square foot facility in Silver Spring to serve as a monoclonal antibody manufacturing site, and a 121,000 square foot facility in Silver Spring to provide additional office space.(RTP facility)(RTP facility), which serves as our co-headquarters and is occupied by our clinical research and development, commercialization, and our logistics and manufacturing personnel. We manufacture Orenitram tabletsdrug product and we package, warehouse, and distribute Tyvaso, Remodulin, Tyvaso, Orenitram, and Unituxin at this location. We also own a 132-acre170-acre site containing approximately 330,000217,000 square feet of building space adjacent to our RTP facility, which we use for ourrelatingrelated to our lung regeneration program, office space, and for future expansion. Europe—In Germany, we lease a warehouse where we maintain inventory of components for our Tyvaso Inhalation System. The German facility includes office and laboratory space. District of Columbia—We own two adjacent buildings in Washington, D.C., which serve as office space. Florida—We own an office building in Satellite Beach, Florida and a facility in Melbourne, Florida used as a reimbursement support call center. We are also constructing a 75,000 square foot building in Jacksonville, Florida, to serve as a regional ex-vivo lung perfusion facility as part of our collaboration with the Mayo Clinic.ITEMLEGAL PROCEEDINGS16—14—Litigation, to our consolidated financial statements, which is incorporated herein by reference.ITEMMINE SAFETY DISCLOSURESITEMMARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES(and associated preferred stock purchase rights) trades on the NASDAQNasdaq Global Select Market under the symbol "UTHR"“UTHR”. The table below sets forth the high and low closing prices for our common stock for the periods indicated: 2017 2016 High Low High Low $ 168.42 $ 135.38 $ 155.54 $ 108.47 $ 133.12 $ 118.34 $ 121.03 $ 98.33 $ 136.81 $ 114.60 $ 129.64 $ 107.73 $ 151.28 $ 118.58 $ 145.38 $ 111.68 14, 2018,15, 2023, there were 3632 holders of record of our common stock.20162022 Credit Agreement contains covenants that may restrict us from doing so. We intend to retain any earnings for use in our business operations.44 United Therapeutics, a public benefit corporation three monthsyear ended December 31, 2017, as our most recent share repurchase program was completed in September 2017.2022.20122017 through December 31, 20172022 of our common stock, compared with an investment in the stocks represented in each of the NASDAQNasdaq U.S. Benchmark TR Index and the NASDAQ ICB: 4577 Pharmaceutical StockNasdaq U.S. Benchmark Pharmaceuticals TR Index, assuming the investment of $100 at the beginning of the period and the reinvestment of dividends, if any.
ITEMSELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and the notes accompanying the consolidated financial statements andItem 7—Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Report. The historical results are not necessarily indicative of results to be expected for future periods. The following information is presented in millions, except per share data. Year Ended December 31, 2017 2016 2015 2014 2013 $ 1,725.3 $ 1,598.8 $ 1,465.8 $ 1,288.5 $ 1,117.0 $ 814.9 $ 1,061.7 $ 699.0 $ 538.8 $ 292.5 $ 417.9 $ 713.7 $ 651.6 $ 340.1 $ 174.6 $ 9.50 $ 16.29 $ 14.17 $ 7.06 $ 3.49 $ 9.31 $ 15.25 $ 12.72 $ 6.28 $ 3.28 2022 Annual Report 45 As of December 31, 2017 2016 2015 2014 2013 $ 1,430.1 $ 1,053.1 $ 991.8 $ 818.2 $ 1,142.0 $ 2,879.4 $ 2,325.6 $ 2,184.4 $ 1,884.4 $ 2,087.6 $ 313.7 $ 130.9 $ 144.0 $ 114.5 $ 95.6 $ 2,101.8 $ 1,851.3 $ 1,588.6 $ 1,242.4 $ 1,259.3 ITEMMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOverviewCommercial Productscurrentlyundertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise.46 United Therapeutics, a public benefit corporation the prostacyclin analogue treprostinil, approved by the FDA for subcutaneous and intravenous administration to diminish symptoms associated with exercise in PAH patients.patients with PAH. Remodulin has also been approved in various countries outside of the United States.formulations, indications and delivery devices for our existing products. In particular, we are developing the Implantable Systemproducts. We recently developed a new pump for Remodulin, called the Remunity Pump, and are currently developing a new version of the RemUnity systemRemunity Pump.We are also working with a medical device manufacturer to develop new delivery systems for delivery of intravenous and subcutaneous Remodulin, respectively.Remodulin. We are studying Tyvaso in patients with WHO Group 3idiopathic pulmonary hypertension (which we refer to as Tyvaso-ILD), and Orenitram in patients with WHO Group 2 pulmonary hypertension (which we refer to as OreniLeft)fibrosis (the TETON studies). We are also studying dinutuximab in patients with small cell lung cancer. Finally, we are engaged in studies to improve the label for the use of Orenitram in PAH patients, including our FREEDOM-EV study of Orenitram in combination with background therapy, a project we refer to as OreniPlus.therapies forproducts to treat PAH (esuberaprost, RemoPro(RemoPro and eNOS gene therapy)ralinepag). We are also heavily engaged in early-stage research and development of a number of organ transplantation-related technologies including regenerative medicine, 3-D organ bioprinting, xenotransplantation, biomechanical lungs and ex-vivoex vivo lung perfusion. Finally, we are engaged in additional, early-stage research and development efforts in PAH and other diseases. For additional detail regarding our research and development programs, seePart I, Item 1—Business—Research and Development.net product salestotal revenues consist primarily of sales of the five commercial products noted above.above, together with associated sales of delivery devices (in the case of Remodulin, Tyvaso, and Tyvaso DPI). We have entered into separate, non-exclusive distribution agreements with Accredo Health Group, Inc. and its affiliates and Caremark, L.L.C. to distribute Tyvaso, Tyvaso DPI, Remodulin, Tyvasothe Remunity Pump, and Orenitram in the United States, and we have entered into an exclusive distribution agreement with ASD Specialty Healthcare, Inc., an affiliate of AmerisourceBergen Corporation, to distribute Unituxin in the United States. WeWe also sell Tyvaso, Remodulin, and TyvasoUnituxin to distributors internationally. We sell Adcirca through Lilly'sthe pharmaceutical wholesale network.network of Eli Lilly and Company (Lilly). To the extent we have increased the price of any of these products, increases have typically been in the single-digit percentages per year, except for Adcirca, the price of which is set solely by Lilly. In 2018, we anticipate revenues will decrease as compared to 2017, given the impact of anticipated generic competition for Adcirca beginning mid-2018, as well as reimbursement challenges for our oral therapies leading to increased utilization of our patient assistance programs. We are investing in the development of new products and label expansions for existing products, which we expect to result in a return to revenue growth beginning in 2019.Remodulin, Tyvaso or Orenitram therapythese therapies can be life threatening. Our specialty pharmaceutical distributors typically place monthly or semi-monthly orders based on current utilization trends and contractual minimum and maximum inventory requirements. As a result, sales of Remodulin, Tyvaso and Orenitramour treprostinil-based therapies can vary depending on the timing and magnitude of these orders and do not precisely reflect changes in patient demand. Since our inception, we have devotedfollowing costs:Product Sales product sales primarily includes costs to manufacture and acquireour products, sold to customers, royalty and sales-based milestone payments under license agreements granting us rights to sell related products, direct and indirect distribution costs incurred in the sale of our products, and the costs of inventory reserves for current and projected obsolescence. These costs also include share-based2022 Annual Report 47 Our cost of product sales for Adcirca increased significantly as a percentage of Adcirca revenues beginning December 1, 2017, from five percent to an effective rate of approximately 42.5 percent, as a result of the increased royalty and milestone payments contained in our amended license agreement with Lilly.pre-FDA approval payments to third-party contract manufacturers.manufacturers before FDA approval of the relevant product. Expenses also include costs for third-party arrangements, including upfront fees and milestone payments required under license arrangements for therapies under development. We have incurred,do not track fully-burdened research and expect to continue to incur, increased clinical trial-relateddevelopment expenses driven by the recent expansion of our pipeline programs, which we expect will result in the enrollment of several large clinical studies.grants to non-affiliated, non-profit organizations, and other professional service fees.(the 1999 Plan) and awards under our Share Tracking Awards Plans (STAP). In June 2015, our shareholders approved the United Therapeutics Corporation 2015 Stock Incentive Plan (the 2015 Plan), which authorizes the issuanceSTAP). Issuance of up to 6,150,000 shares of our common stock. Following approval of the 2015 Plan, we ceased granting awards under the STAP and the 1999 Plan, andboth of these plans was discontinued in 2015. Currently, we modified our equity compensation programs to grant stock options to employees who previously received STAP awards, and to grant stock options and restricted stock units under the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan), which provides for the issuance of up to 11,500,000 shares of our non-employee directors.common stock, including the 500,000 shares added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2022. In October 2017,February 2019, our Board of Directors approved the 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), which provides for the issuance of up to 99,000 shares of our common stock pursuant to awards granted to newly-hired Unitherians. Currently, we also began issuinggrant equity-based awards to Unitherians and members of our Board of Directors in the form of stock options and restricted stock units under the 2015 Plan, and we may grant restricted stock units to employeesnewly-hired Unitherians under the 20152019 Inducement Plan. Over time, we expect to increase the percentage of our equity awards made to employees in the form of restricted stock units, instead of stock options. The grant date fair values of stock options and restricted stock units are recognized as share-based compensation expense ratably over their vesting periods.valuesvalue of STAP awards and stock option grants areoptions is measured using inputs and assumptions under the Black-Scholes-Merton model. The fair value of restricted stock units is measured using our stock price on the date of grant.have ceased grantingno longer grant STAP awards, we still have a significant number ofhad approximately 0.6 million STAP awards outstanding.outstanding as of December 31, 2022. We account for STAP awards as liabilities because they are settled in cash. As such, we must re-measure the fair value of STAP awards at the end of each financial reporting period until the awards are no longer outstanding. Changes in our liability associated with outstanding STAP liability resulting fromawards as a result of such re-measurements are recorded as adjustments to share-based compensation expense (benefit) expense and can create substantial volatility within our operating expenses from period to period. The following factors, among others, have a significant impact on the amount of share-based compensation expense (benefit) expense recognized in connection with STAP awards from period to period: (1) volatility in the price of our common stock (specifically, increases in the price of our common stock will generally result in an increase in our STAP liability and related compensation expense, while decreases in our stock price will generally result in a reduction in our STAP liability and related compensation expense); and (2) changesdecreases in the number of outstanding awards; andawards.changescontinued growth in the number of vestedpatients prescribed Orenitram following our expansion of the Orenitram label to reflect the results of the FREEDOM-EV study; and unvested awards.Future Prospects Our strategy is to grow the revenues(4) modest price increases for some of our existing commercial products, including through approvalproducts; partially offset by further generic erosion of new and/or improved indications, formulations and delivery devices. These and other research and development efforts are designed to provideAdcirca sales. We believe that additional revenue growth in the nearmedium- and medium term, while efforts arelonger-term will be driven by new products and new indications for existing products being developed in our pipeline, as described above under way to develop technologies in organ manufacturing in the longer term.theseour objectives, grow our business, and sustain our growth andmaintain profitability will depend on many factors, including among others: (1) the timing and outcome of preclinical research, clinical trials, and regulatory approvalsapproval applications for products we develop; (2) the timing and degree of our success related to the commercial launch ofin commercially launching new products; (3) the demand for our products; (4) the price of our products and the reimbursement of our products by public and private health insurance organizations;organizations, including the impact on such prices and reimbursement amounts as a result of the IRA; (5) the competition we face within our industry,48 United Therapeutics, a public benefit corporation companies;companies and new PAH therapies; (6) our ability to effectively manage our business in an increasingly complex legal and regulatory environment; (7) our ability to defend against challenges to our patents; and (8) the risks identified inPart I, Item 1A—Risk Factors, included in this Report. We believe the increased use of dual-upfront oral therapy (tadalafil and ambrisentan) following positive results of theAMBITION study, combined with the launch of Uptravi, an oral IP-receptor agonist, has delayed many patients' initiation of inhaled or infused prostacyclin therapies, which we believe has depressed our sales of Tyvaso and Remodulin. In addition, Uptravi competes directly with our oral prostacyclin therapy, Orenitram, which we believe has depressed our sales of Orenitram. Given the progressive nature of PAH, we believe many patients will begin taking Orenitram, Tyvaso or Remodulin after their disease progresses while on these or other oral therapies, leading to increased revenue from these three products.following table below presents the components of total revenues (dollars in millions):Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Net product sales: $ 873.0 $ 607.5 $ 483.3 $ 265.5 $ 124.2 44 % 26 % 500.2 513.7 516.7 (13.5) (3.0) (3) % (1) % Orenitram 325.1 306.1 293.1 19.0 13.0 6 % 4 % Unituxin 182.9 202.3 122.9 (19.4) 79.4 (10) % 65 % Adcirca 41.3 55.9 67.3 (14.6) (11.4) (26) % (17) % Other 13.8 — — 13.8 — Total revenues $ 1,936.3 $ 1,685.5 $ 1,483.3 $ 250.8 $ 202.2 15 % 14 % Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 670.9 $ 602.3 $ 572.8 11.4 % 5.2 % 372.9 404.6 470.1 (7.8 )% (13.9 )% 419.7 372.2 278.8 12.8 % 33.5 % 185.8 157.2 118.4 18.2 % 32.8 % 76.0 62.5 20.5 21.6 % 204.9 % — — 5.2 — % (100.0 )% $ 1,725.3 $ 1,598.8 $ 1,465.8 7.9 % 9.1 % ��� Revenues(1) Net product sales include both the drug product and the respective inhalation devices for both Tyvaso and Tyvaso DPI.year ended December 31, 2017 increasedRemunity Pump.$126.5$271.0 million in 2022, as compared to 2021.same periodimpact of a price increase and lower gross-to-net deductions. The increase in 2016. quantities sold was driven by the commercial launch of Tyvaso DPI in June 2022 and continued growth in the number of patients following the PH-ILD label expansion in March 2021.increased by $68.6 million, with $47.4 million relateddecreased in 2022, as compared to the one-time purchase of Remodulin inventory by an international distributor,2021, due to an expansion of the distributor's commercial responsibilities during the third quarter.a $15.9 million decrease in U.S. Remodulin net product sales, partially offset by a $2.4 million increase in international Remodulin net product sales. The remaining increasedecrease in U.S. Remodulin net product sales was due to an increasedriven by a decrease in the number of patients being treated with Remodulin. Adcirca net product sales increased by $47.5 million primarily due to price increases, which were determined by Lilly. Additional revenue growth resulted from a $28.6 million increase in Orenitram net product sales due to an increase in the number of patients being treated with Orenitram and a $13.5 million increase in Unituxin net product sales due to an increase in the number of vialsquantities sold, and price increases. These revenue increases were partially offset by a $31.7 million decrease in Tyvaso net product sales, with $11.1 million of the decrease due to an additional one-time liability for estimated Medicaid rebates that we recorded during 2017 related to Tyvaso sales prior to January 1, 2017. The remaining decrease in Tyvaso net product sales resulted from a net decrease in the number of patients being treated with Tyvaso, which we believe was driven by the availability of oral prostacyclin-class therapies and the increased propensity to treat patients with multiple oral therapies earlier in their disease progression, which can delay the need to prescribe inhaled therapies such as Tyvaso. Revenues for the year ended December 31, 2016 increased by $133.0 million as compared to the same period in 2015. Adcirca net product sales increased by $93.4 million due to an increase in the number of Adcirca bottles sold and Lilly-determined price increases. Unituxin net product sales increased by $42.0 million due to the launch of Unituxin in the third quarter of 2015. lower gross-to-net deductions.by $38.8 millionin 2022, as compared to 2021, primarily due to ana price increase in the number of patients being treated with Orenitram. Remodulinand lower gross-to-net deductions.increased by $29.5 million duedecreased in 2022, as compared to an increase in the number of patients being treated with Remodulin. These increases were partially offset by a $65.5 million decrease in Tyvaso net product sales2021, primarily due to a decrease in the number of patients being treated with Tyvaso andquantities sold, partially offset by a $5.2 million decreaseprice increase.other revenues2022, as compared to 2021, due to a decline in quantities sold as a result of the sale of our antiviral program in late 2015. We believe the decrease in Tyvaso sales resulted from the availability of oral prostacyclin class therapies, and increased propensity to treat patients with multiple oral therapies earlier in their disease progression, which can delay the need to prescribe inhaled therapies. For the years ended December 31, 2017, 2016 and 2015 approximately 60 percent, 64 percent and 72 percent, respectively, of total revenues were derived from net product sales of Remodulin, Tyvaso and Orenitram to our U.S.-based specialty pharmaceutical distributors. Remaining revenues werederived primarily from net product sales ofgeneric competition for Adcirca and Unituxin and net product sales of Remodulin to our international distributors. The potential launch of generic versions of Remodulin and Adcirca in 2018, as described inItem 1—Business—Patents and Other Proprietary Rights, Strategic Licenses and Market Exclusivity—Generic Competition¸ could materially reduce our revenues from those products.2022 Annual Report 49 allowancesallowance for sales returns; and (4) distributor fees. These are referred to as gross-to-net deductions and are primarily based on estimates reflecting historical experiences andas well as contractual and statutory requirements. We currently estimate our allowance for sales returns using reports from our distributors and available industry data, including our estimate of inventory remaining in the distribution channel. The tables below include a reconciliation of the liability accounts associated with these deductions (in millions):Year Ended December 31, 2022 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2022 $ 67.8 $ 3.8 $ 6.3 $ 7.9 $ 85.8 Provisions attributed to sales in: Current period 202.8 43.2 2.3 34.5 282.8 Prior periods (4.3) (0.5) (3.1) 0.5 (7.4) Payments or credits attributed to sales in: Current period (121.1) (38.9) (0.7) (23.6) (184.3) Prior periods (63.9) (3.2) (1.5) (8.4) (77.0) Balance, December 31, 2022 $ 81.3 $ 4.4 $ 3.3 $ 10.9 $ 99.9 Year Ended December 31, 2021 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2021 $ 65.3 $ 3.0 $ 12.5 $ 3.7 $ 84.5 Provisions attributed to sales in: Current period 217.0 38.5 — 31.3 286.8 Prior periods 1.6 — (3.9) 0.2 (2.1) Payments or credits attributed to sales in: Current period (151.8) (34.7) — (22.4) (208.9) Prior periods (64.3) (3.0) (2.3) (4.9) (74.5) Balance, December 31, 2021 $ 67.8 $ 3.8 $ 6.3 $ 7.9 $ 85.8 Year Ended December 31, 2020 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2020 $ 51.7 $ 2.6 $ 14.2 $ 4.1 $ 72.6 Provisions attributed to sales in: Current period 196.1 32.5 — 20.6 249.2 Prior periods (0.2) — — (0.3) (0.5) Payments or credits attributed to sales in: Current period (139.7) (29.6) — (16.9) (186.2) Prior periods (42.6) (2.5) (1.7) (3.8) (50.6) Balance, December 31, 2020 $ 65.3 $ 3.0 $ 12.5 $ 3.7 $ 84.5 Year Ended December 31, 2017 Rebates and
Chargebacks Prompt Pay
Discounts Allowance for
Sales Returns Distributor
Fees Total $ 46.0 $ 4.3 $ 7.7 $ 2.8 $ 60.8 228.2 37.9 0.9 14.5 281.5 13.3 — — (0.2 ) 13.1 (163.1 ) (33.3 ) — (10.9 ) (207.3 ) (50.4 ) (4.2 ) (1.4 ) (2.8 ) (58.8 ) $ 74.0 $ 4.7 $ 7.2 $ 3.4 $ 89.3 50 United Therapeutics, a public benefit corporation Year Ended December 31, 2016 Rebates and
Chargebacks Prompt Pay
Discounts Allowance for
Sales Returns Distributor
Fees Total $ 44.6 $ 3.9 $ 5.3 $ 2.6 $ 56.4 206.3 36.9 3.2 12.6 259.0 4.0 — — — 4.0 (164.7 ) (32.7 ) — (9.8 ) (207.2 ) (44.2 ) (3.8 ) (0.8 ) (2.6 ) (51.4 ) $ 46.0 $ 4.3 $ 7.7 $ 2.8 $ 60.8 Year Ended December 31, 2015 Rebates and
Chargebacks Prompt Pay
Discounts Allowance for
Sales Returns Distributor
Fees Total $ 31.6 $ 3.3 $ 4.0 $ 0.6 $ 39.5 171.6 33.5 2.7 9.8 217.6 — — 0.3 (0.3 ) — (123.9 ) (29.6 ) — (7.2 ) (160.7 ) (34.7 ) (3.3 ) (1.7 ) (0.3 ) (40.0 ) $ 44.6 $ 3.9 $ 5.3 $ 2.6 $ 56.4 Product Sales product sales by major category (dollars in millions): Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 103.1 $ 72.1 $ 60.2 43.0 % 19.8 % 2.6 0.6 8.8 333.3 % (93.2 )% $ 105.7 $ 72.7 $ 69.0 45.4 % 5.4 % Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: Cost of sales $ 146.7 $ 116.7 $ 101.0 $ 30.0 $ 15.7 26 % 16 % 4.9 5.8 7.1 (0.9) (1.3) (16) % (18) % Total cost of sales $ 151.6 $ 122.5 $ 108.1 $ 29.1 $ 14.4 24 % 13 % Product Sales.sales, excluding share-based compensation. The increase in cost of product sales of $31.0 million for the year ended December 31, 20172022, as compared to the same period in 2016,2021, was primarily attributabledue to a $21.9 millionan increase in royalty expense and product costs for Adcirca. AsTyvaso DPI following the commercial launch of the product in June 2022.Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: $ 168.8 $ 156.7 $ 177.4 $ 12.1 $ (20.7) 8 % (12) % 131.4 117.2 111.3 14.2 5.9 12 % 5 % 23.8 24.4 29.5 (0.6) (5.1) (2) % (17) % — 130.0 0.5 (130.0) 129.5 (100) % (1.1) 111.8 39.0 (112.9) 72.8 (101) % 187 % Total research and development expense $ 322.9 $ 540.1 $ 357.7 $ (217.2) $ 182.4 (40) % 51 % an amendmentresearch and development activities.license agreementcontingent consideration obligations, and a one-time expense associated with Lilly, our royalty rate on net product salesthe redemption of Adcirca increased from five percent to an effective rate of approximately 42.5 percent effective December 1, 2017. a pediatric disease priority review voucher in 2021.remaining increasedecrease in cost of product sales was primarily attributable to an increase in sales. The increase in cost of product sales of $11.9 millionresearch and development expense for the year ended December 31, 20162022, as compared to the same period in 2015,2021, was primarily attributabledue to: (1) a $107.3 million IPR&D impairment charge related to increased sales.Research and Development Expense The table below summarizes research andour March 2021 decision to discontinue the U.S. development expense by major category (dollarsof Trevyent; (2) a $105.0 million purchase of a pediatric disease priority review voucher in millions): Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 256.4 $ 157.6 $ 157.4 62.7 % 0.1 % 8.2 (10.0 ) 87.7 182.0 % (111.4 )% $ 264.6 $ 147.6 $ 245.1 79.3 % (39.8 )% Research and development projects. The increase in research and development projects of $98.8 million for the twelve months ended December 31, 2017, as compared to the same period in 2016, was driven by the expansionJanuary 2021, which we redeemed upon submission of our pipeline programsNDA for Tyvaso DPI; and (3) impairment charges related to treat cardiopulmonary diseaseproperty, plant, and cancer and to develop technologies in organ manufacturing. Research and development expense for the treatment of cardiopulmonary diseases increased by $38.4 million for the twelve months ended December 31, 2017, as compared to the same period in 2016, due to increased spending on several clinical and non-clinical studies, includingFREEDOM-EV,INCREASE andSOUTHPAW, on the development of new drug products, including RemoPro, and drug delivery device developments, including the Implantable System for Remodulin and the RemUnity system. The increases in research and development expenses were partially offset by a decrease in expenses for esuberaprost formulation and the relatedBEAT study, as the clinical trial is fully enrolled. Research and development expense for cancer-related projects increased by $21.3 million for the twelve months ended December 31, 2017, as compared to the same period in 2016, due to an increase in spending on theDISTINCT study. Research and development expenses for organ manufacturing projects increased by $36.3 million for2022 Annual Report 51 Expense Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 203.1 $ 210.7 $ 174.6 (3.6 )% 20.7 % 64.3 84.6 94.3 (24.0 )% (10.3 )% 62.7 21.5 183.8 191.6 % (88.3 )% $ 330.1 $ 316.8 $ 452.7 4.2 % (30.0 )% Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: General and administrative $ 333.2 $ 294.3 $ 241.8 $ 38.9 $ 52.5 13 % 22 % Sales and marketing 70.8 64.4 54.9 6.4 9.5 10 % 17 % 78.1 108.3 127.2 (30.2) (18.9) (28) % (15) % Total selling, general, and administrative expense $ 482.1 $ 467.0 $ 423.9 $ 15.1 $ 43.1 3 % 10 % administrative.administrative, excluding share-based compensation. The decreaseincrease in general and administrative expenses of $7.6 millionexpense for the year ended December 31, 2017,2022, as compared to the same period in 2016,2021, was primarily resulted from:due to: (1) a $32.0 million decrease in grants to non-affiliated, non-profit organizations that provide financial assistance to patients with PAH; and (2) a $9.3 million decrease of expenses in connection with the disposition and write down of various properties in 2016. The decrease was partially offset by: (1) a $9.4 million increase in legal fees incurred in connection with intellectual property litigation and the DOJ investigation of our support of 501(c)(3) organizations that provide financial assistance to patients; (2) a $9.2 million increase in compensation due to an increase in staffing; and (3) a $6.5 million increase in consulting expenses. The increase in general and administrative expenses of $36.1 million for the year ended December 31, 2016, as compared to the same period in 2015, primarily resulted from a $20.0 million increase in grants to non-affiliated, non-profit organizations that provide financial assistance to patients with PAH; and $9.3 million increase of expenses in connection for disposition and write down of various properties. Sales and marketing. The decrease in sales and marketing expenses of $20.3 million for the year ended December 31, 2017, as compared to the same period in 2016, primarily resulted from a $11.3 million decrease in compensation and related costsbranded prescription drug fee expense associated with sales of Tyvaso; and (2) impairment charges related to property, plant, and equipment. The branded prescription drug fee is a required fee imposed under the 2016 consolidationPatient Protection and Affordable Care Act of our sales2010, which became applicable to Tyvaso in 2021, and marketing staff. The decrease in sales and marketing expensesis now applicable to Tyvaso DPI, as a result of $9.7 milliontheir approval for treatment of PH-ILD, an indication that currently does not have orphan designation from the year ended December 31, 2016 as compared to the same period in 2015, primarily resulted from an overall decrease in general spending on sales and marketing activities as we consolidated our sales and marketing staff in the last half of 2016. Expense(benefit) by major category (dollars in millions):Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: Stock options $ 22.6 $ 25.4 $ 44.0 $ (2.8) $ (18.6) (11) % (42) % Restricted stock units 35.7 24.7 20.5 11.0 4.2 45 % 20 % STAP awards 46.7 86.6 97.8 (39.9) (11.2) (46) % (11) % Employee stock purchase plan 1.8 1.8 1.5 — 0.3 — % 20 % Total share-based compensation expense $ 106.8 $ 138.5 $ 163.8 $ (31.7) $ (25.3) (23) % (15) % Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 43.0 $ 24.8 $ 4.9 73.4 % 406.1 % 2.2 1.1 — 100.0 % 100.0 % 27.1 (15.2 ) 274.2 278.3 % (105.5 )% 1.2 1.4 1.2 (14.3 )% 16.7 % $ 73.5 $ 12.1 $ 280.3 507.4 % (95.7 )% (benefit) by line item onin our consolidated statements of operations (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Cost of sales $ 4.9 $ 5.8 $ 7.1 $ (0.9) $ (1.3) (16) % (18) % Research and development 23.8 24.4 29.5 (0.6) (5.1) (2) % (17) % Selling, general, and administrative 78.1 108.3 127.2 (30.2) (18.9) (28) % (15) % Total share-based compensation expense $ 106.8 $ 138.5 $ 163.8 $ (31.7) $ (25.3) (23) % (15) % Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 2.6 $ 0.6 $ 8.8 333.3 % (93.2 )% 8.2 (10.0 ) 87.7 182.0 % (111.4 )% 62.7 21.5 183.8 191.6 % (88.3 )% $ 73.5 $ 12.1 $ 280.3 507.4 % (95.7 )% Share-based compensation.The increasedecrease in share-based compensation of $61.4expense for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to: (1) a decrease in STAP expense driven by a 29 percent increase in our stock price during 2022, as compared to a 42 percent increase in our stock price during 2021; and (2) a decrease in stock option expense due to fewer awards granted and remaining outstanding in 2022, as compared to the same period in 2021, partially offset by an increase in restricted stock unit expense. Refer to Note 8—Share-Based Compensation, to our consolidated financial statements for more information.52 United Therapeutics, a public benefit corporation 2017,2022, as compared to $118.1 million for the same period in 2016, was primarily due to: (1) a $42.3 million increase in STAP expense related to an increase in2021. For the years ended December 31, 2022 and 2021, our stock price during 2017effective income tax rates (ETR) were approximately 23 percent and the continued vesting of outstanding awards; and (2) an $18.2 million increase in stock option expense due to additional awards granted and outstanding in 2017. We expect the share-based compensation for restricted stock units to increase in the future as additional restricted stock units are granted. Refer to Note 9—Share-Based Compensation for more information. The decrease in share-based compensation of $268.2 million20 percent, respectively. Our ETR for the year ended December 31, 2016,2022 increased, as compared to the same period in 2015, was primarily due to a $289.4 million decrease in STAP expense related to a decrease in our stock price during 2016, partially offset by a $19.9 million increase in stock option expense due to additional awards granted and outstanding in 2016.Gain on Sale of Intangible Asset In September 2015, we sold for $350.0 million in cash the Rare Pediatric Priority Review Voucher (PPRV) we received from the FDA in connection with the approval of Unituxin. The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset, as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.Settlement of Loss Contingency In December 2017, we entered into a civil Settlement Agreement with the U.S. Government to resolve a DOJ investigation related to our support of 501(c)(3) organizations that provide financial assistance to patients. During the second quarter of 2017, we recorded a $210.0 million accrual relating to this matter, and ultimately paid this amount, plus interest, to the U.S. Government upon settlement. This matter is described in more detail in Note 16—Litigation—Department of Justice Subpoena, to our consolidated financial statements.Impairment of Cost Method Investments During the year ended December 31, 2017, we recorded $49.6 million of impairment charges related to our cost method investments in privately-held companies. There were no such impairment charges in the years ended December 31, 2015 and 2016.Income Tax Expense The provision for income taxes was $351.6 millionETR for the year ended December 31, 2017, compared to $346.5 million for the same period in 2016. The change in the provision for income taxes was2021, primarily due to an increase in valuation allowance in the current year compared to a chargedecrease in the prior year, and an increase in the reserve for the revaluation of deferred taxes due to the lower future corporateuncertain tax rate enacted by Tax Reform, and increases in nondeductible items,positions, partially offset by a decreasean increase in net income before taxes. The provision for income taxes was $346.5 million for the year ended December 31, 2016 compared to $392.8 million for the year ended 2015. The decrease in the provision for income taxes between those years resulted primarilyexcess tax benefits from a decrease in non-deductible compensation related to the STAP awards resulting from a decrease in our stock price from December 31, 2015 to December 31, 2016. For the years ended December 31, 2017, 2016 and 2015, the effective tax rates were approximately 46 percent, 33 percent and 38 percent, respectively.share-based compensation. For additional details, refer to Note 11—10— Tax Reform has multiple provisions that impact our tax expense. The significant impacts of Tax Reform include a reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent, a requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, additional limitations on deductions for executive compensation, the opportunity to fully expense (take 100 percent bonus depreciation) qualified property, reduction of the Orphan Drug Credit, repeal of the Section 199 deduction for domestic manufacturing activities, and creation of new taxes on certain foreign-sourced earnings. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of Tax Reform. As a result of changes under Tax Reform, we have recognized a provisional amount of $71.0 million of additional tax expense in our consolidated financial statements for the year ended December 31, 2017. The additional tax expense is primarily due to the revaluing of our ending net deferred tax assets at December 31, 2017 because of the reduction in the U.S. corporate income tax rate under Tax Reform. While we have substantially completed our provisional analysis of the income tax effects of Tax Reform, and recorded a reasonable estimate of such effects, the ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, further refinement of our calculations, additional analysis, changes in assumptions, and actions we may take as a result of Tax Reform. Going forward, we expect to see a decrease in our effective tax rate as a result of Tax Reform, principally driven by the reduced federal corporate tax rate, partially offset by added limitations on deductions for executive compensation, reduction of the Orphan Drug Credit and repeal of the Section 199 deduction.Share Repurchase In April 2017, our Board of Directors approved a share repurchase program authorizing up to $250.0 million in aggregate repurchases of our common stock. Pursuant to this authorization, in May 2017, we paid $250.0 million upon entering into an accelerated share repurchase agreement (ASR) with Citibank, N.A. (Citibank). Pursuant to the terms of the ASR, in June 2017, Citibank delivered to us approximately 1.7 million shares of our common stock, representing the minimum number of shares wewere entitled to receive under the ASR. Upon termination of the ASR in September 2017, Citibank delivered to us approximately 0.3 million additional shares of our common stock.isare sufficient to fund ongoing operations and future business plans as we expect long-term demand foraggregate growth in revenues from our commercial products other than Adcirca to continue to grow.products. Furthermore, our customer base remains stable and we believe that it presents minimal credit risk. However, any projections of future cash flows are inherently subject to uncertainty and we may seek other forms of financing. In January 2016,March 2022, we entered into our 2016a credit agreement (the 2022Credit Agreement), which provides for unsecured revolving credit facilities of up to $2.0 billion in the aggregate. Our aggregate outstanding balance under the 2022 Credit Agreement, which provides an unsecured, revolving line of credit of up to $1.0 billion, withmatures in 2027, was $800.0 million and classified as a current maturity date of January 2023, of which $250.0 million was drawn and outstandingnon-current liability in our consolidated balance sheets as of December 31, 2017.2022. SeeUnsecured Revolving Credit FacilityFacilities below for further details. Year Ended
December 31, Percentage
Change 2017 2016 2017 v. 2016 $ 705.1 $ 1,023.0 (31.1 )% 222.3 27.8 699.6 % 502.7 2.3 NM (1) $ 1,430.1 $ 1,053.1 35.8 % The net increase in our cashCash and cash equivalents and marketable investments was primarily due to: (1) $474.2 millioncomprise the following (dollars in cash generated from operations; and (2) $39.9 million of proceeds frommillions):Year Ended December 31, Dollar Change Percentage Change 2022 2021 2022 v. 2021 2022 v. 2021 Cash and cash equivalents $ 961.2 $ 894.8 $ 66.4 7 % Marketable investments—current 1,877.5 1,035.9 841.6 81 % Marketable investments—non-current 1,316.2 1,649.9 (333.7) (20) % Total cash and cash equivalents and marketable investments $ 4,154.9 $ 3,580.6 $ 574.3 16 % exercise of stock options, partially offset by: (1) $86.3 millionfollowing (dollars in cash paid to purchase property, plant and equipment; and (2) $60.4 million in cash used to purchase investments in privately-held companies,Cash Flows Percentage Change Year Ended December 31, 2017 v. 2016 2016 v. 2015 2017 2016 2015 $ 474.2 $ 643.6 $ 382.8 (26.3 )% 68.1 % $ (835.6 ) $ 48.3 $ 503.6 NM (1) (90.4 )% $ 43.3 $ (497.7 ) $ (447.0 ) 108.7 % (11.3 )%
millions):Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Net cash provided by operating activities $ 802.5 $ 598.2 $ 755.7 $ 204.3 $ (157.5) 34 % (21) % Net cash used in investing activities $ (811.5) $ (486.9) $ (738.5) $ (324.6) $ 251.6 (67) % 34 % Net cash provided by (used in) financing activities $ 75.4 $ 44.8 $ (16.9) $ 30.6 $ 61.7 68 % 365 % and accrued expenses, which include share-based compensation arrangements.decreaseincrease of $169.4$204.3 million in net cash provided by operating activities for the year ended December 31, 20172022, as compared to the year ended December 31, 2016 was primarily due to:(1) $210.0 million paid to settle a loss contingency; and (2) a $78.4 million net cash outflow due to changes in other operating assets and liabilities. The decrease was partially offset by: (1) a $126.5 million increase in revenues during the year, which resulted in higher cash collections; and (2) a $15.5 million decrease in cash paid for income taxes due to timing of payments. The increase of $260.8 million in net cash provided by operating activities for the year ended December 31, 2016 compared to the year ended December 31, 20152021, was primarily due to: (1) a $133.0$105.0 million increase in revenuespurchase of a pediatric disease priority review voucher during the year which resulted in higher cash collections;ended December 31, 2021; and (2) a $179.3$12.9 million increase in cash flows due to a decrease in cash paid to settle STAP award exercises, partially offset by a $69.1 millionawards. The remainder of the increase in cash paid for income taxes.2022 Annual Report 53 $883.9$324.6 million in net cash used in investing activities for the year ended December 31, 20172022, as compared to the year ended December 31, 20162021, was primarily due to: (1) a $826.9$317.2 million increase in cash used for nettotal purchases, sales, and maturities of available-for-sale, held-to-maturitymarketable investments; and other investments; (2) a $48.3$18.0 million increase in cash paid to purchase property, plant, and equipment; and (3) a $24.4 million increase in cash paid to purchase investments held at cost. The increase in cash used was partially offset by $8.3 million in proceeds from the sale of property, plant and equipment. The decrease of $455.3 million in net cash provided by investing activities for the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily due to: (1) a $350.0 million decrease in cash due to the sale of our PPRV in September 2015, which did not recur in 2016; and (2) a $128.0 million decrease in cash provided by the net maturities of held-to-maturity and other investments. The decrease in cash used was partially offset by: (1) a $16.1 million decrease in cash paid to purchase investments held at cost; and (2) a $11.8 million decrease in cash paid to purchase property, plant and equipment. We will need to construct additional facilities to support the development and commercialization of our products and technologies. We have budgeted for capital expenditures of approximately $250.0 million over the next three years.$541.0$30.6 million in net cash provided by financing activities for the year ended December 31, 20172022, as compared to the year ended December 31, 20162021, was primarily due to: (1) $250.0 million in proceeds from borrowing under our line of credit used to fund the ASR described in Note 7—Debt—Unsecured Revolving Credit Facility, to our consolidated financial statements; (2) a $250.0 million decrease in repurchases of our common stock; and (3) a $32.2$38.4 million increase in proceeds from the exercise of stock option exercises. The increase of $50.7 million in net cash used in financing activities for the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily due to: (1) a $105.5 million increase in repurchases of our common stock; and (2) a $63.1 million decrease in proceeds from stock option exercises including excess tax benefits from share based compensation. The increase in cash used wasoptions, partially offset by a $117.6$7.5 million decreaseincrease in payments of debt issuance costs related payments. In October 2015, our Board of Directors authorized a new program forto the repurchase of up to $500.0 million of our common stock in open or privately negotiated transactions, at our discretion. This program was effective from January 1, 2016 to December 31, 2016. In the aggregate, we repurchased approximately 4.2 million shares of common stock under this program for $500.0 million. In June 2014, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock. In the aggregate, we repurchased approximately 3.3 million shares of common stock under this program for $500.0 million during 2014 and 2015.FacilityJanuary 2016,March 2022, we entered into the 20162022 Credit Agreement, providingwhich provides for an unsecured revolving credit facilityfacilities of up to $1.0 billion. In accordance with$2.0 billion in the terms of the 2016 Credit Agreement, in January 2017 and in January 2018, we extended the maturity date of the 2016 Credit Agreement by one year to Januaryaggregate. On March 31, 2022, and January 2023, respectively. On June 1, 2017, we borrowed $250.0$800.0 million under this facilitythe facilities and used the funds to initiate the accelerated share repurchase program noted above. As we no longer intend to repay the full outstanding indebtedness under our then-existing credit agreement (the 2018 Credit Agreement). The aggregate balance within one year, the balance has been reclassified from short-term to long-term within the consolidated balance sheets.of $800.0 million under our 2022 Credit Agreement remained outstanding as of both December 31, 2022 and February 22, 2023. Refer to Note 7—Debt,—Unsecured Revolving Credit Facility,to our consolidated financial statements.Secured Line of Credit In 2013, we entered into a one-year credit agreement (the 2013 Credit Agreement) with Wells Fargo for a $75.0 million revolving loan facility. In each of July 2014 and July 2015, we amended the 2013 Credit Agreement solely to extend its maturity to September 30 of 2015 and 2017, respectively. In January 2016, we terminated and repaid in full all obligations under the 2013 Credit Agreement when we entered into the 2016 Credit Agreement.Convertible Senior Notes In October 2011, we issued the Convertible Notes with an aggregate principal value of $250.0 million. Upon maturity of the Convertible Notes in September 2016, we fulfilled all remaining settlement and repayment obligations. At2017,2022, we had the following contractual obligations (in millions): Payments Due by Period Total Less than
1 year 2 - 3 Years 4 - 5 Years More than
5 Years $ 6.7 $ 3.4 $ 1.6 $ 1.3 $ 0.4 295.8 9.2 18.3 268.3 — 231.7 231.3 0.4 — — 93.2 16.4 5.8 — 71.0 550.4 463.9 76.0 6.5 4.0 $ 1,177.8 $ 724.2 $ 102.1 $ 276.1 $ 75.4 Payments Due by Period Total Less than 1 year 2-3 Years 4-5 Years More than 5 Years Operating lease obligations $ 31.7 $ 3.9 $ 7.0 $ 7.1 $ 13.7 1,014.2 50.4 100.8 863.0 — 76.4 76.4 — — — 67.7 19.5 18.1 — 30.1 654.4 464.4 150.5 25.3 14.2 $ 1,844.4 $ 614.6 $ 276.4 $ 895.4 $ 58.0 vested and expected to vest, assuming that unvested awards will be exercised immediately upon vesting.as of December 31, 2022. Refer to Note 98—Share-based CompensationShare-Based Compensation—STAP Awards to our consolidated financial statements for further details.12—11—Employee Benefit Plans—Supplemental Executive Retirement Plan to our consolidated financial statements for further details.(i)(1) commitments related to research and development (including clinical trials) for new and existing products; (ii)(2) open purchase orders for capitalTable expenditures primarily related to our continued investment in construction of Contentsexpenditures;additional facilities to support the development and (iii)commercialization of our products and technologies; and (3) open purchase orders for the acquisition of goods and services in the ordinary course of business. Our obligation to pay certainThe timing and amount of these amountsour obligations may be reduceddiffer based on certain future events.pay additional amountsmake payments upon the achievement of various development, regulatory, and commercial milestones for agreements we have entered into with third parties. These payments are contingent upon the occurrence of various future events, some of which have a high degree of uncertainty of occurring. These contingent payments have not been included in the table above, and, except with respect to the fair value of the contingent consideration obligations, are not recorded onin our consolidated balance sheets.Toray License Obligations In 2000, we entered into a license agreement with Toray Refer to obtain exclusive rightsNote 12—Commitments and Contingencies to develop and market beraprost, a chemically stable oral prostacyclin analogue, in a sustained release formulation in the United States and Canadaour consolidated financial statements for the treatment of all cardiovascular indications. Pursuant to a 2007 amendment to this agreement, we issued Toray 200,000 shares of our common stock. Toray has the right to request that we repurchase these shares (which have since split into 400,000 shares) upon 30 days prior written notice at the price of $27.21 per share. To date, Toray has not notified us that it intends to require us to repurchase these shares. In 2011, we amended this agreement to reduce the royalty rates in exchange for a total of $50.0 million in equal, non-refundable payments to Toray over the five-year period ending in 2015. further details.2015, this obligation was fully satisfied. In March 2017,2022, our other non-current liabilities in our consolidated balance sheets includes a liability of $15.9 million for unrecognized tax benefits, including related interest and penalties. Due to the high degree of uncertainty on the timing of future events that could extinguish these unrecognized tax benefits, we amendedare unable to estimate the period of settlement and therefore we have excluded these unrecognized tax benefits from the table above. Refer to Note 10—Income Taxes to our license agreement with Toray toconsolidated financial statements for further reduce the royalty rate to single digits in exchange for a commitment to make milestone payments to Toray in the event that we do not achieve certain clinical and regulatory events by certain dates.54 United Therapeutics, a public benefit corporation and Assignment Agreements Historically, we paidfiveroyalty equal to ten percent royalty on net product sales of Adcirca. In May 2017, we amended our license agreement with Lilly relating to Adcirca. As a result of this amendment, beginning December 1, 2017, our royalty rate on net product sales of Adcirca, increased from five percent to ten percent and we are required to makeas well as milestone payments to Lilly equal toof $325,000 for each $1,000,000 in Adcirca net product sales. We pay a single-digit percentage royalty based on net product sales of Orenitram under our license agreement with Supernus. We also pay The Scripps Research Institute a one percent royalty on sales of Unituxin. We have entered into other license rights arrangementsagreements under which we are required to make milestone payments upon the achievement of certain developmental and commercialization objectives and royalty payments upon the commercialization of related licensed technology.(GAAP)(GAAP). GAAP requires that we make estimates and assumptions that affect the amounts and timing reported in our consolidated financial statements. As we become aware of updated information or new developments, these estimates and assumptions may change and materially impact reported amounts. We consider the following accounting policies to be critical to our consolidated financial statements because they require the use of our judgment and estimates (including those that are forward-looking) in their application.five commercial products: Tyvaso, Tyvaso DPI, Remodulin, Tyvaso, Orenitram, Unituxin, and Adcirca. Revenue is recognized when title and the risks and rewardswe transfer control of ownership have transferredour products to our distributors, which is generally whenas our product is delivered to the distributor's location.contracts have a single performance obligation (delivery of our product). These revenues are subject to various product sales allowances, referred to as gross-to-net deductions, which are deducted from revenues to determine net product sales. For a description of our related accounting policies, refer to Note 2—Summary of Significant Accounting Policies—Revenue Recognition in the to our consolidated financial statements.categoriescategory of gross-to-net deductions involveinvolves the use of significant estimates and judgments and information obtained from external sources.2017,2022 and 2021, we had a $74.0liability of $81.3 million liabilityand $67.8 million, respectively, related to rebates and chargebacks.net product salestotal revenues for each of the years ended December 31, 2017, 20162022, 2021, and 2015.Allowance for Sales Returns The sales terms for Adcirca and Unituxin include return rights; however, we have not recorded an allowance for returns of Unituxin because our historical returns have been insignificant. For our sales of Adcirca, we record an allowance for returns in the same period that we recognize revenue. Return rights extend throughout the distribution channel and allow for returns of expired product for up to 12 months past the product's expiration date. As there are generally 24 to 36 months from the initial sale of Adcirca to its expiration date, we must estimate the amount of product that will be returned. Historically, actual returns have not differed materially from our estimates, and have been less than one percent of our net product sales for each of the years ended December 31, 2017, 2016 and 2015.Following the loss of exclusivity for Adcirca in the second quarter of 2018, we may experience an elevated level of product returns as product inventory remaining in the distribution channel expires.Part II—Item 7—Management's Discussion and Analysis of Financial Condition and the section above entitled Results of Operations—Results of Operations—RevenuesGross-to-Net Deductions.2022 Annual Report 55 period, and based onperiod; (2) the grant date fair value of stock options and restricted stock units.units; and (3) the purchase date fair value of stock under our employee stock purchase plan. With the exception of restricted stock units, we estimate the fair value of all share-based awards using the Black-Scholes-Merton valuation model. We measure the fair value of restricted stock units using the stock price on the grant date. Valuation models, like the Black-Scholes-Merton model, require the use of subjective assumptions that could materially impact the estimation of fair value and related compensation expense to be recognized. These assumptions include the expected volatility of our stock price and the expected term of awards. Developing these assumptions requires the use of judgment. For additional information on the assumptions used in the Black-Scholes-Merton valuation model, see Note 9—8—Share-Based Compensation, to our consolidated financial statements. Effective January 1, 2017, we adopted the provisions of ASU 2016-09,Compensation—Stock Compensation. As part of the adoption, we established an accounting policy election to account for forfeitures of share-based awards when they occur. Upon adoption, we recognized a cumulative-effect adjustment for the removal of the forfeiture estimate with respect to awards that were continuing to vest as of January 1, 2017. The adjustment resulted in a decrease to retained earnings of $5.8 million, which is net of a $3.2 million tax benefit. Refer to Note 3—Recently Issued Accounting Standards—Accounting Standards Adopted During 2017, to our consolidated financial statements.Performance-Based Stock Options In March 2017, we began issuing stock options with performance conditions under the 2015 Plan. The awards have vesting conditions tied to the achievement of specified performance conditions. The performance conditions have target performance levels that span from one to three years. Throughout the performance period, we re-assess the estimated performance and update the number of performance-based awards that we believe will ultimately vest. Upon the conclusion of the performance period, the performance level achieved will be measured and the ultimate number of shares that may vest will be determined. The estimation of future performance requires the use of judgment. Share-based compensation expense for these awards is recorded ratably over their vesting period, depending on the specific terms of the award and achievement of the specified performance conditions. During 2017, we granted 0.9 million stock options with performance vesting conditions with a total grant date fair value of $53.9 million assuming achievement of target performance levels.Investments Held at Cost We have investments in several privately-held companies that have a strategic connection to our business, most of them in the form of preferred stock investments. We account for most of these investments in privately-held companies under the cost method of accounting because we own less than 20 percent of the companies' outstanding voting shares and do not have significant influence over their operations. Realization of our equity position in these companies is uncertain. We review these investments individually for impairment by evaluating if events or circumstances have occurred that mayhave a significant adverse effect on their fair value. If such events or circumstances have occurred, we will estimate the fair value of the investment and determine if any decline in the fair value of the investment below its carrying value is other-than-temporary. In such cases, the estimated fair value of the investment is determined using unobservable inputs including assumptions by the company's management. Because several of these companies are in the early startup or development stages, these entities are subject to potential changes in cash flows, valuation, and inability to attract new investors which may be necessary for the liquidity needed to support their operations. If we determine that a decline in value in an investment is other-than-temporary, we recognize an impairment loss in the period in which the other-than-temporary decline occurs. If facts and circumstances change, we could be required to account for one or more of these investments under the equity method of accounting or consolidate the company's operations for financial accounting purposes.Income Taxes Income taxes are accounted for in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities, using enacted tax rates in effect for years in which the temporary differences are expected to reverse. A valuation allowance is applied against any net deferred tax asset if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We recognize the benefit of an uncertain tax position that has been taken or that we expect to take on income tax returns only if such tax position is more likely than not to be sustained. The benefit recognized is measured as the largest amount that has a greater than 50 percent likelihood of being realized upon settlement. The ultimate resolution of uncertain tax positions could result in amounts different from those recognized in our consolidated financial statements.ITEMQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK2017,2022, we have invested $766.7 million$3.2 billion in corporate-debtcorporate debt securities and federally-sponsored agencies.U.S. government and agency securities. The market value of these investments varies inversely with changes in prevailing market interest rates. In general, as interest rates increase, the market value of a debt investment would be expected to decrease. Conversely, as interest rates decrease, the market value of a debt investment would be expected to increase. To date,During 2022, we have not experienced significant volatility in the value of these investments. However, toinvestments as a direct result of the current interest rate environment. To address market risk, we invest in debt securities with terms no longer than three years and typically hold these investments to maturity so that they can be redeemed at their stated or face value. Many of our investments may be called by their respective issuers prior to maturity. The following table summarizes the expected maturities and weighted average interest rates as of December 31, 20172022 (dollars in millions):Expected Maturity 2023 2024 2025 Available-for-sale investments $ 1,862.4 $ 1,159.5 $ 156.7 Weighted average interest rate 1.1 % 1.7 % 3.2 % Expected Maturity 2018 2019 2020 $ 27.7 $ 1.6 $ — 236.3 384.3 116.8 1.4 % 1.9 % 2.0 % 2017,2022 and 2021, we had $250.0$800.0 million aggregate principal amounts outstanding onunder our unsecured revolving credit facility2022 Credit Agreement and 2018 Credit Agreement, respectively, which includesbears interest at a variable interest rate component.rate. As a result, we are subject to interest rate risk with respect to such floating-rate debt. A 100 basis point increase in the variable interest rate component of our borrowings would increase our annual interest expense by approximately $2.5$8.0 million or 28 percent.25 percent, and $8.0 million or 43 percent, for the years ended December 31, 2022 and 2021, respectively. Refer to Note 7—Debt, to our consolidated financial statements.56 United Therapeutics, a public benefit corporation Contentsboth December 31, 2022 and 2021, we had 0.6 million and 1.1 million awards outstanding under our Share Tracking Awards Plan, respectively. These awards are referred to as STAP awards. STAP awards convey the right to receive in cash an amount equal to the appreciation of our common stock, which is measured as the increase in the closing price of our common stock between the dates of grant and exercise. As of December 31, 2022 and 2021, the aggregate STAP awards liability balance was $80.8 million and $102.4 million, respectively. Estimating the fair value of STAP awards requires the use of certain inputs that can materially impact the determination of fair value and the amount of share-based compensation expense (benefit) we recognize. Inputs used in estimating fair value include the price of our common stock, the expected volatility of the price of our common stock, the risk-free interest rate, the expected term of STAP awards, and the expected dividend yield. As of December 31, 2022 and 2021, a one dollar change in our stock price would, holding other factors constant, increase or decrease the fair value of our STAP awards liability by approximately $0.5 million and $1.0 million, respectively.2022 Annual Report 57 ITEMFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA UNITED THERAPEUTICS CORPORATIONINDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Index to Consolidated Financial StatementsF-1 United Therapeutics, a public benefit corporation
United Therapeutics CorporationCompany)Company) as of December 31, 20172022 and 2016, and2021, the related consolidated statements of operations, comprehensive income, stockholders'stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017,2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidatedconsolidated financial statements"statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company atas of December 31, 20172022 and 2016,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2022, in conformity with U.S. generally accepted accounting principles.(PCAOB)(PCAOB), the Company'sCompany’s internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(2013 framework) and our report dated February 21, 2018,22, 2023, expressed an unqualified opinion thereon.Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.includesincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.2022 Annual Report F-2 Revenue Reductions — Accounting for Rebates Description of
the MatterHow We Addressed
the Matter in
Our AuditCompany'sCompany’s auditor since 2003.
Tysons, Virginia
February 21, 201822, 2023F-3 United Therapeutics, a public benefit corporation
United Therapeutics CorporationoverOver Financial ReportingCorporation'sCorporation’s internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria)criteria). In our opinion, United Therapeutics Corporation (the Company)Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2022, based on the COSO criteria.(PCAOB)(PCAOB), the consolidated balance sheets of the Company as of December 31, 20172022 and 2016, and2021, the related consolidated statements of operations, comprehensive income, stockholders'stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017,2022 and the related notes and financial statement schedule of the Company listed in the Index at Item 15(a)(2) and our report dated February 21, 2018,22, 2023, expressed an unqualified opinion thereon.Company'sCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management'sManagement’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company'sCompany’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.company'scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'scompany’s assets that could have a material effect on the financial statements.
February 21, 201822, 20232022 Annual Report F-4
(In millions, except share and per share data) December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 961.2 $ 894.8 Marketable investments 1,877.5 1,035.9 Accounts receivable, no allowance for 2022 and 2021 220.4 198.7 Inventories, net 102.0 93.8 Other current assets 219.2 100.4 Total current assets 3,380.3 2,323.6 Marketable investments 1,316.2 1,649.9 Goodwill and other intangible assets, net 44.5 44.6 Property, plant, and equipment, net 861.5 780.9 Deferred tax assets, net 327.7 261.9 Other non-current assets 114.3 108.2 Total assets $ 6,044.5 $ 5,169.1 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 229.9 $ 174.6 Share tracking awards plan 80.8 102.4 Other current liabilities 32.5 28.4 Total current liabilities 343.2 305.4 Line of credit 800.0 800.0 Other non-current liabilities 104.6 104.8 Total liabilities 1,247.8 1,210.2 Commitments and contingencies—Note 12 Stockholders’ equity: Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued — — Common stock, par value $.01, 245,000,000 shares authorized, 72,651,280 and 71,727,021 shares issued, and 46,032,064 and 45,107,805 shares outstanding as of December 31, 2022 and 2021, respectively 0.7 0.7 Additional paid-in capital 2,388.4 2,245.4 Accumulated other comprehensive loss (55.5) (23.0) Treasury stock, 26,619,216 shares as of December 31, 2022 and 2021 (2,579.2) (2,579.2) Retained earnings 5,042.3 4,315.0 Total stockholders’ equity 4,796.7 3,958.9 Total liabilities and stockholders’ equity $ 6,044.5 $ 5,169.1 December 31, 2017 2016 $ 705.1 $ 1,023.0 222.3 27.8 297.1 214.5 107.9 100.0 115.5 59.5 1,447.9 1,424.8 502.7 2.3 45.6 33.8 545.7 489.3 113.4 178.3 224.1 197.1 $ 2,879.4 $ 2,325.6 $ 171.1 $ 104.2 240.1 194.8 33.5 33.5 444.7 332.5 250.0 — 63.7 130.9 758.4 463.4 19.2 10.9 — — — — 0.7 0.7 1,854.3 1,813.5 (19.6 ) (16.8 ) (2,579.2 ) (2,379.6 ) 2,845.6 2,433.5 2,101.8 1,851.3 $ 2,879.4 $ 2,325.6 F-5 United Therapeutics, a public benefit corporation
(In millions, except per share data)Year Ended December 31, 2022 2021 2020 Total revenues $ 1,936.3 $ 1,685.5 $ 1,483.3 Operating expenses: Cost of sales 151.6 122.5 108.1 Research and development 322.9 540.1 357.7 Selling, general, and administrative 482.1 467.0 423.9 Total operating expenses 956.6 1,129.6 889.7 Operating income 979.7 555.9 593.6 Interest income 45.2 16.7 28.6 Interest expense (32.4) (18.6) (23.5) Other (expense) income, net (40.2) 42.2 49.3 Impairments of investments in privately-held companies (1.7) (2.3) (9.1) Total other (expense) income, net (29.1) 38.0 45.3 Income before income taxes 950.6 593.9 638.9 Income tax expense (223.3) (118.1) (124.1) Net income $ 727.3 $ 475.8 $ 514.8 Net income per common share: Basic $ 15.98 $ 10.60 $ 11.65 Diluted $ 15.00 $ 10.06 $ 11.54 Weighted average number of common shares outstanding: Basic 45.5 44.9 44.2 Diluted 48.5 47.3 44.6 Year Ended December 31, 2017 2016 2015 $ 1,725.3 $ 1,598.8 $ 1,460.6 — — 5.2 1,725.3 1,598.8 1,465.8 105.7 72.7 69.0 264.6 147.6 245.1 330.1 316.8 452.7 210.0 — — 910.4 537.1 766.8 814.9 1,061.7 699.0 (9.0 ) (3.9 ) (4.7 ) — — 350.0 13.2 2.4 0.1 (49.6 ) — — (45.4 ) (1.5 ) 345.4 769.5 1,060.2 1,044.4 (351.6 ) (346.5 ) (392.8 ) $ 417.9 $ 713.7 $ 651.6 $ 9.50 $ 16.29 $ 14.17 $ 9.31 $ 15.25 $ 12.72 44.0 43.8 46.0 44.9 46.8 51.2 2022 Annual Report F-6
(In millions) Year Ended December 31, 2022 2021 2020 Net income $ 727.3 $ 475.8 $ 514.8 Other comprehensive (loss) income: Defined benefit pension plan: Actuarial gain (loss) arising during period, net of tax 18.7 5.6 (8.0) Amortization of prior service cost included in net periodic pension cost, net of tax 0.6 0.6 1.3 Total defined benefit pension plan, net of tax 19.3 6.2 (6.7) Unrealized (loss) gain on available-for-sale securities, net of tax (51.8) (15.0) 6.7 Other comprehensive (loss) income, net of tax (32.5) (8.8) — Comprehensive income $ 694.8 $ 467.0 $ 514.8 Year Ended December 31, 2017 2016 2015 $ 417.9 $ 713.7 $ 651.6 0.2 (3.0 ) (5.3 ) (1.7 ) 6.0 0.7 0.6 0.6 0.9 (1.1 ) 6.6 1.6 (1.9 ) — — (2.8 ) 3.6 (3.7 ) $ 415.1 $ 717.3 $ 647.9 F-7 United Therapeutics, a public benefit corporation Stockholders'Stockholders’ Equity
(In millions) Common Stock Additional
Paid-in
CapitalAccumulated
Other
Comprehensive
LossTreasury
StockRetained Earnings Stockholders’ Equity Shares Amount Balance, December 31, 2019 70.5 $ 0.7 $ 2,047.9 $ (14.2) $ (2,579.2) $ 3,325.2 $ 2,780.4 Net income — — — — — 514.8 514.8 Unrealized gains on available-for-sale securities — — — 6.7 — — 6.7 Defined benefit pension plan — — — (6.7) — — (6.7) 0.1 — 4.7 — — — 4.7 0.1 — — — — — — RSUs withheld for taxes — — (3.7) — — — (3.7) Exercise of stock options 0.4 — 33.8 — — — 33.8 Share-based compensation — — 66.0 — — — 66.0 Cumulative effect of accounting change — — — — — (0.8) (0.8) Balance, December 31, 2020 71.1 $ 0.7 $ 2,148.7 $ (14.2) $ (2,579.2) $ 3,839.2 $ 3,395.2 Net income — — — — — 475.8 475.8 Unrealized losses on available-for-sale securities — — — (15.0) — — (15.0) Defined benefit pension plan — — — 6.2 — — 6.2 Shares issued under ESPP 0.1 — 5.6 — — — 5.6 Common stock issued for RSUs vested 0.1 — — — — — — RSUs withheld for taxes — — (10.8) — — — (10.8) Exercise of stock options 0.4 — 50.0 — — — 50.0 Share-based compensation — — 51.9 — — — 51.9 Balance, December 31, 2021 71.7 $ 0.7 $ 2,245.4 $ (23.0) $ (2,579.2) $ 4,315.0 $ 3,958.9 Net income — — — — — 727.3 727.3 Unrealized losses on available-for-sale securities — — — (51.8) — — (51.8) Defined benefit pension plan — — — 19.3 — — 19.3 Shares issued under ESPP 0.1 — 5.9 — — — 5.9 Common stock issued for RSUs vested 0.1 — — — — — — RSUs withheld for taxes — — (11.4) — — — (11.4) Exercise of stock options 0.8 — 88.4 — — — 88.4 Share-based compensation — — 60.1 — — — 60.1 Balance, December 31, 2022 72.7 $ 0.7 $ 2,388.4 $ (55.5) $ (2,579.2) $ 5,042.3 $ 4,796.7 Common Stock Accumulated
Other
Comprehensive
Loss Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Stockholders'
Equity Shares Amount 66.0 $ 0.7 $ 1,376.1 $ (16.7 ) $ (1,185.8 ) $ 1,068.2 $ 1,242.5 — — — — — 651.6 651.6 — — — (5.3 ) — — (5.3 ) — — — 1.6 — — 1.6 — — 4.0 — — — 4.0 2.0 — 324.7 — (321.8 ) — 2.9 — — 3.0 — — — 3.0 — — — — (394.5 ) — (394.5 ) 1.0 — 39.3 — — — 39.3 — — 37.4 — — — 37.4 — — 6.1 — — — 6.1 69.0 0.7 1,790.6 (20.4 ) (1,902.1 ) 1,719.8 1,588.6 — — — — — 713.7 713.7 — — — (3.0 ) — — (3.0 ) — — — 6.6 — — 6.6 — — 4.3 — — — 4.3 0.1 — 7.6 — (7.5 ) — 0.1 — — 0.1 — — — 0.1 — — (30.0 ) — 30.0 — — — — — — (500.0 ) — (500.0 ) 0.2 — 7.7 — — — 7.7 — — 5.9 — — — 5.9 — — 27.3 — — — 27.3 69.3 0.7 1,813.5 (16.8 ) (2,379.6 ) 2,433.5 1,851.3 — — — — — 417.9 417.9 — — — 0.2 — — 0.2 — — — (1.9 ) — — (1.9 ) — — — (1.1 ) — — (1.1 ) 0.1 — 4.1 — — — 4.1 — — (53.2 ) — 53.2 — — — — 2.8 — (252.8 ) — (250.0 ) 0.5 — 39.9 — — — 39.9 — — 46.4 — — — 46.4 — — 0.7 — — (5.8 ) (5.1 ) — — 0.1 — — — 0.1 69.9 $ 0.7 $ 1,854.3 $ (19.6 ) $ (2,579.2 ) $ 2,845.6 $ 2,101.8 2022 Annual Report F-8
(In millions) Year Ended December 31, 2022 2021 2020 Cash flows from operating activities: Net income $ 727.3 $ 475.8 $ 514.8 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 51.3 49.9 49.9 Share-based compensation expense 106.8 138.5 163.8 Impairments of investments in privately-held companies 1.7 2.3 9.1 Impairments of property, plant, and equipment 11.2 19.2 5.4 Intangible asset impairment charges — 113.4 — Realized gain on sale of investment in privately-held company (6.2) — — Realized gain on sale of equity securities (0.9) (92.6) (3.4) Other 52.5 65.9 (47.0) Changes in operating assets and liabilities: Accounts receivable (21.7) (41.3) (6.0) Inventories (13.4) (7.5) 10.3 Accounts payable and accrued expenses 44.5 (12.5) 38.6 Other assets and liabilities (150.6) (112.9) 20.2 Net cash provided by operating activities 802.5 598.2 755.7 Cash flows from investing activities: Purchases of property, plant, and equipment (138.8) (120.8) (59.3) Proceeds from sale of property, plant, and equipment — — 2.4 Purchases of available-for-sale debt securities (1,708.6) (1,895.3) (2,308.8) Maturities of available-for-sale debt securities 1,021.5 1,370.1 1,523.4 Sales of available-for-sale debt securities — 47.6 76.5 Sales of investments in equity securities 3.8 111.5 27.3 Sale of investment in privately-held company 8.6 — — Proceeds from note receivable 3.5 — — Purchase of investment in privately-held company (1.5) — — Net cash used in investing activities (811.5) (486.9) (738.5) Cash flows from financing activities: Proceeds from line of credit 800.0 — — Repayment of line of credit (800.0) — (50.0) Payments of debt issuance costs (7.5) — (1.7) Proceeds from the exercise of stock options 88.4 50.0 33.8 Proceeds from the issuance of stock under ESPP 5.9 5.6 4.7 RSUs withheld for taxes (11.4) (10.8) (3.7) Net cash provided by (used in) financing activities 75.4 44.8 (16.9) Net increase in cash and cash equivalents $ 66.4 $ 156.1 $ 0.3 Cash and cash equivalents, beginning of year 894.8 738.7 738.4 Cash and cash equivalents, end of year $ 961.2 $ 894.8 $ 738.7 Supplemental cash flow information: Cash paid for interest $ 29.1 $ 16.2 $ 20.7 Cash paid for income taxes $ 275.7 $ 153.3 $ 92.8 Non-cash investing and financing activities: Non-cash additions to property, plant, and equipment $ 14.5 $ 3.7 $ 3.5 Receivable from maturity of available-for-sale debt securities $ 70.0 $ — $ — Year Ended December 31, 2017 2016 2015 $ 417.9 $ 713.7 $ 651.6 31.0 31.6 32.9 73.5 12.1 280.3 49.6 — — — — (350.0 ) (19.4 ) 9.5 7.5 — (5.9 ) (37.4 ) (82.7 ) (21.7 ) (30.5 ) (0.5 ) (24.5 ) (6.8 ) 66.2 0.6 17.0 (61.4 ) (71.8 ) (181.8 ) 474.2 643.6 382.8 (86.3 ) (38.0 ) (49.8 ) 8.3 — — (51.8 ) (0.8 ) (62.8 ) 52.9 130.4 320.4 (718.4 ) — — 20.0 — — (60.4 ) (36.0 ) (54.2 ) — (2.1 ) — 0.1 — — — — 350.0 — (5.2 ) — (835.6 ) 48.3 503.6 250.0 — — — (8.8 ) (133.2 ) (0.7 ) (6.8 ) — (250.0 ) (500.0 ) (394.5 ) 39.9 7.7 39.3 4.1 4.3 4.0 — 5.9 37.4 43.3 (497.7 ) (447.0 ) 0.2 (3.0 ) (5.3 ) (317.9 ) 191.2 434.1 1,023.0 831.8 397.7 $ 705.1 $ 1,023.0 $ 831.8 $ 7.5 $ 1.5 $ 1.0 $ 346.9 $ 362.4 $ 293.3 $ 210.0 $ — $ — $ 11.5 $ 2.9 $ 1.1 $ — $ 7.5 $ 321.8 F-9 United Therapeutics, a public benefit corporation (FDA)(FDA) to market the following therapies: Remodulin® (treprostinil) Injection (Remodulin), Tyvaso®Tyvaso® (treprostinil) Inhalation Solution (Tyvaso)(Tyvaso), Adcirca® (tadalafil) Tablets (Adcirca)Tyvaso DPI® (treprostinil) Inhalation Powder (Tyvaso DPI), Orenitram®Remodulin® (treprostinil) Injection (Remodulin), Orenitram® (treprostinil) Extended-Release Tablets (Orenitram) and Unituxin®(Orenitram), Unituxin® (dinutuximab) Injection (Unituxin)(Unituxin), and Adcirca® (tadalafil) Tablets (Adcirca). Our only significantWe also derive revenues outside the United States are derived from sales of Tyvaso, Remodulin, in Europe. We commenced commercial sales of Unituxin during the third quarter of 2015.theour consolidated financial statements, unless the context otherwise requires, the terms "we"“we”, "us"“us”, "our"“our”, and similar terms refer to United Therapeutics Corporation and its consolidated subsidiaries.wholly ownedconsolidated subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (GAAP)(GAAP). All intercompany balances and transactions have been eliminated in consolidation.
Income Taxes, we reclassified certain prior period amounts between the various components of the reconciliation of income tax expense to conform with the current period presentation.theour consolidated financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of theour consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on assumptions regarding historical experience, currently available information, and anticipated developments that we believe are reasonable and appropriate. However, because the use of estimates involves an inherent degree of uncertainty, actual results could differ from those estimates. Estimates are used for, but not limited to, revenue recognition, share-based compensation, determining the fair value of assets acquired and liabilities assumed in business combinations, marketable investments, fair value measurements (including those relatingrelated to contingent consideration), inventory reserves, investments in privately-held companies, income taxes, goodwill and other intangible assets, and obligations related to our Supplemental Executive Retirement Plan.Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The fair values of our marketable investments and contingent consideration are reported in Note 4—Investments and Note 5—, respectively.Fair Value MeasurementsUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)(FASB)(FASB) codification that requires or permits fair value measurements. Refer to related disclosures in Note 5—Fair Value Measurements.2022 Annual Report F-10 available-for-sale or held-to-maturity.available-for-sale. If we have both the positive intent and the ability to hold the securities until maturity, we have the option to classify the securities are classified as held-to-maturity. We determine the appropriate classification of the securities at the time they are acquired and evaluate the appropriateness of such classifications at each balance sheet date. Available-for-sale debt securities are recorded at fair value, with the portion of the unrealized gains and losses that are not credit-related included as a component of accumulated other comprehensive income (loss) in stockholders'stockholders’ equity, until realized. Held-to-maturity debt securities are recorded at amortized cost, adjusted for the amortization of discounts or premiums. Related discounts and premiums are amortized over the term of these securities as an adjustment to the yield using the effective interest method. Marketable investments are classified as either current or non-current assets on in our consolidated balance sheets based on their contractual maturity dates.investment portfolioavailable-for-sale debt securities for impairment quarterly or more frequently if circumstances warrant. In the event that the carrying value of an investmenta debt security exceeds its fair value, and the declinewe evaluate whether any impairment is a result of credit loss or other factors. For investments in value is determined to be other-than-temporary,an unrealized loss position, we record an impairment charge within earnings attributable to the estimated credit loss. In determiningdetermine whether a decline incredit loss exists by considering information about the valuecollectibility of an investment is other-than-temporary, we evaluate currently available factors that may include, among others: (1) generalthe instrument, current market conditions; (2) the duration and extent to which fair value has been less than the carrying value; (3)conditions, the investment issuer'sissuer’s financial condition and business outlook;outlook, and (4)reasonable and supportable forecasts of economic conditions. An allowance for credit losses would be recorded in our assessment asconsolidated statements of operations in the event the decline in the investment’s fair value was a result of credit loss, and unrealized losses not related to whether it is more likely than not thatcredit losses would be recorded in other comprehensive income (loss).will be required to sell a security prior to recoveryown in these companies are recorded at fair value. Changes in the fair value of its amortized cost basis.Tablepublicly-traded equity securities are recorded in our consolidated statements of ContentsUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)
other (expense) income, net. As of December 31, 2022 2021 Raw materials $ 18.0 $ 17.6 Work-in-progress 33.3 31.9 Finished goods 50.7 44.3 Total inventories $ 102.0 $ 93.8 As of
December 31, 2017 2016 $ 27.9 $ 25.4 24.1 24.9 55.9 49.7 $ 107.9 $ 100.0 If the carrying amountFollowing adoption of the reporting unit exceeds its fair value, then the amount of an impairment loss, if any, is measured as the excess of the recorded amount of goodwill over its implied fair value (StepASU 2017-04 on January 1, 2020, we are no longer required to perform Step 2 of the goodwill impairment test).test. The impairment charge is limited to the amount of goodwill allocated to the reporting unit, thus, the new standard eliminates the requirement to calculate a goodwill impairment charge using Step 2. We usedperformed a qualitative assessment for our goodwill impairment testing for 20172022, 2021, and 2016. Our evaluation of goodwill completed during2020. During the years ended December 31, 20172022, 2021, and 2016, resulted2020 our evaluation of goodwill did not result in noany impairment losses.projects,(IPR&D) assets, which were measured at their estimated fair values as of their acquisition dates. We used a qualitative assessment for our indefinite-lived intangible assetThere were no impairment testing. Our evaluation oflosses related to indefinite-lived intangible assets completed during the yearsyear ended December 31, 20172022. During the year ended December 31, 2021, we recognized IPR&D impairment charges of $113.4 million related to our decision to discontinue the U.S. development of Trevyent® and 2016, resultedour decision to discontinue our research and development efforts related to biomechanical lungs, described in footnotes 1 and 2, respectively, to the Goodwill table below. There were no impairment losses.20172022, 2021, and 2016.UNITED THERAPEUTICS CORPORATIONNotes2020 related to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)F-11 United Therapeutics, a public benefit corporation consists ofcomprise the following (in millions): As of December 31, 2022 As of December 31, 2021 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ 28.0 $ — $ 28.0 $ 28.0 $ — $ 28.0 Other intangible assets: Technology, patents, and trade names 6.7 (5.7) 1.0 6.7 (5.6) 1.1 15.5 — 15.5 15.5 — 15.5 Total $ 50.2 $ (5.7) $ 44.5 $ 50.2 $ (5.6) $ 44.6 As of December 31, 2017 As of December 31, 2016 Gross Accumulated
Amortization Net Gross Accumulated
Amortization Net $ 13.7 $ — $ 13.7 $ 10.3 $ — $ 10.3 6.5 (5.0 ) 1.5 6.5 (4.8 ) 1.7 30.4 — 30.4 21.5 — 21.5 4.3 (4.3 ) — 4.3 (4.0 ) 0.3 $ 54.9 $ (9.3 ) $ 45.6 $ 42.6 $ (8.8 ) $ 33.8 2017, 20162022, 2021, and 2015,2020, was $0.5$0.1 million, $0.6$0.1 million, and $1.1$0.2 million, respectively. As of December 31, 2017,2022, aggregate amortization expense relatingrelated to definite-lived intangible assets for each of the five succeeding years and thereafter is estimated at less than $1.0 million per year. In September 2015, we sold for $350.0 million in cash the Rare Pediatric Priority Review Voucher (PPRV) we received from the FDA in connection with the approval of Unituxin. The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.property, plant and equipmentPP&E by major category are as follows:Land improvements 15 Years Buildings 25 - 3925-39 YearsBuilding improvements 10 - 3910-39 YearsFurniture, equipment, and vehicles 3 - 253-25 YearsLeasehold improvements Remaining lease term, or the estimated useful life of the improvement, whichever is shorter UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued) Property, plant and equipmentPP&E consists of the following (in millions): As of December 31, 2022 2021 Land and land improvements $ 142.7 $ 132.6 Buildings, building improvements, and leasehold improvements 636.7 612.7 Buildings under construction 110.9 55.1 Furniture, equipment, and vehicles 353.9 322.9 Subtotal 1,244.2 1,123.3 Less—accumulated depreciation (382.7) (342.4) PP&E, net $ 861.5 $ 780.9 As of December 31, 2017 2016 $ 60.5 $ 60.1 408.0 409.9 119.8 44.6 159.9 149.7 748.2 664.3 (202.5 ) (175.0 ) $ 545.7 $ 489.3 2017, 20162022, 2021, and 2015,2020, was $30.5$51.2 million, $31.0$49.8 million, and $31.8$49.7 million, respectively.relatingrelated to our construction projects.2022 Annual Report F-12 stockholders'stockholders’ equity. Our revenuesfive commercially approved products: Tyvaso, Tyvaso DPI, Remodulin, Tyvaso, Orenitram, Unituxin, and Adcirca. Revenue is recognizedWe recognize revenue when title and riskwe transfer control of ownership passour product to our distributors, upon satisfactorywhich is generally when the product is shipped or delivered to the distributor. Future revenue from delivery i.e., when all of our performance obligations underproducts will be based on purchase orders provided to us by our distribution agreements have been satisfied. distributors.revenues are subject to various product sales allowancesare recorded net of various forms of gross-to-net deductions. These deductions vary the consideration to which we are entitled in calculating reported net product sales. These sales allowances include:exchange for the sale of our products to our distributors, and include reserves for: (1) rebates and chargebacks; (2) prompt pay discounts:payment discounts; (3) productallowance for sales returns; and (4) distributor fees and other allowances. We estimate sales allowancesthese reserves in the same period that we recognize revenue for product sales to distributors. Except forThe net product returns, our liabilities for sales allowances are recorded in accounts payable and accrued expenses on our consolidated balance sheets. We record our allowance for product returns in other current and non-current liabilities on our consolidated balance sheets. Calculating these sales allowancesamount recognized represents the amount we believe will not be subject to a significant future reversal of revenue.F-13 United Therapeutics, a public benefit corporation estimatesassumptions and judgments, andas well as information obtained from external sources.Chargebacks.chargebacks. Allowances for rebates include mandated discounts due to our participation in various government health care programs, contracted rebates to certain domestic distributors, and contracted discounts with commercial payers. We estimate our rebate liability on a product-by-product basis, considering actual revenue, contractual discount rates, expected utilization under each contract, and historical payment experience. We also consider changes in our product pricing and information regarding changes in program regulations and guidelines. Our chargebacks represent contractual discounts payable to distributors for the difference between the invoice price paid to us by the distributor for a particular product and the contracted price that the distributor'sdistributor’s customer pays for that product. Our chargebacks primarily relateUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)to sales of Adcirca. We estimate our chargeback liability on a product-by-product basis, primarily considering historical payment experience. Although we accrue a liability for rebates and chargebacks in the same period the product is sold, third-party reporting and payment of the rebate or chargeback amount occur on a time lag, with the majority of rebates and chargebacks paid within six months from date of sale.pay discounts.payment discounts. We offer prompt pay discounts to many of our distributors, typically for payments made within 30 days. Prompt pay discounts are estimated in the period of sale based on our experience with sales to eligible distributors. Our domestic distributors have routinely taken advantage of these discounts and we expect them to continue to do so.returns.returns.The sales terms for Adcirca and Unituxin include return rights that extend throughout the distribution channel. For Adcirca, we recognize an allowance for returns as customers have the right to return expired product for up to 12 months pastafter the product'sproduct’s expiration date. Once the product is returned, it is destroyed. We recognize an allowance for returns based on historical returns experience and considering expiration dates of product shippeddate (generally 2418 to 36 months after the initial sale). To date, actualReturned product is destroyed. Regulatory exclusivity for Adcirca expired in May 2018, and generic versions of Adcirca became available for purchase beginning in the third quarter of 2018. Due to the availability of the generic versions, we experienced a significant decline in Adcirca demand, resulting in inventory held by distributors and other downstream customers expiring unsold. Our allowance for product returns havefor Adcirca as of December 31, 2022 and 2021 is $2.4 million and $6.3 million, respectively. We record our allowance for product returns in other current and non-current liabilities in our consolidated balance sheets. We developed our returns liability as of December 31, 2022 based on historical return rates accumulated since the expiration of the regulatory exclusivity in 2018. The returns liability as of December 31, 2021 was based on our estimate of the amount of Adcirca inventory that was in the downstream channel and the amount of that inventory that we expected would not differed materiallybe sold by distributors and other downstream customers. The estimates were developed using reports from our estimates. distributors and other third-party data, including estimates of Adcirca dispenses and the historical impact of generic entrants on other branded products that we deemed comparable to Adcirca.our historicalwe ship product with expiration dates that are generally nine to 14 months after the initial sale. Unituxin product returns havefor each of the years ended December 31, 2022 and 2021 were not been material and we do not record a returns allowance.material. For sales of our other commercial products, we do not offer our customers a general right of return.fees and other allowances.fees.Distributor fees include distribution and other service fees paid to certain distributors. These fees are based on contractual amounts or rates applied to purchases of our product or units of service provided in a given period. Other allowances include paymentsOur liability for distributor fees is included in support of patient assistance programsaccounts payable and are based on the actual amount of financial support provided to patients.
in our consolidated balance sheets.subsequent toafter we recognize revenue, recognition, resulting in receivables from our customers whichthat are presented as accounts receivable on in our consolidated balance sheets. Accounts receivable consist of short-term amounts due from our distributors (generally 30 to 90 days) and are stated at the amount we expect to collect. We establish an allowance for doubtful accounts, if deemed necessary, based on our assessment of the collectability of specific distributor accounts. No allowanceWe did not recognize any impairment losses for doubtful accounts was recognizedreceivable for each of the years endingended December 31, 20172022 and 2016.2021. Changes in accounts receivable are primarily due to the timing and magnitude of orders of our products, the timing of deliverywhen control of our products is transferred to our distributors, and the timing of cash collections.Eli Lilly and Company (Lilly) and distributed through theirits pharmaceutical wholesaler network.network on our behalf. Specifically, Lilly handles all of the administrative functions associated with the sale of Adcirca on our behalf, including the receipt and processing of customer purchase orders, shipment to customers, and invoicing and collection of customer payments. We recognize sales of Adcirca on a gross basis net(net of allowances upon delivery to customersreserves for gross-to-net deductions) based on our determination that we are acting as a principal due to our control of the following factors: (1)product prior to its transfer to our customers. Our control is evidenced by our substantive ownership of product inventory, the fact that we are responsiblebear all inventory risks, our primary responsibility for the2022 Annual Report F-14 purchased by wholesalers; (2) we bear all inventory risk, as titleto our customers, and risk of loss passour ability to us at the shipping point from Lilly'sUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)manufacturing facility; (3) we assume credit risk if Lilly is unable to collect amounts due from customers;influence net product sales through our contracting decisions with commercial payers and (4) we assume the risk and cost of a product recall, if required. refundable payments made in advance of services to be provided to us. Related expenses consist of internal labor and overhead, costs to acquire pharmaceutical products and product rights for development, materials used in clinical trials, and amounts paid to third parties for services, and materials relatingrelated to drug development and clinical trials.in licensingin-licensing the rights to technologies in the research and development stage that have no alternative future use; and Awards under our share tracking awards plans require cash settlement upon exercise and are classified as a liability. Accordingly, the fair value of related cash-settled awards is re-measured at each reporting date until awards are exercised or are otherwise no longer outstanding. Related changes in the fair value of outstanding cash-settled awards at each financial reporting date are recognized as adjustments to share-based compensation expense.9—8—Share-Based Compensation.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)F-15 United Therapeutics, a public benefit corporation (Loss) per Shareisare calculated by dividing the net loss by the weighted average shares outstanding. Potentially dilutive securities are excluded from the calculation because their effect would be anti-dilutive.onin our consolidated balance sheets.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued) During 2017 In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11,Simplifying the Measurement of Inventory (ASU 2015-11), which requires that inventory be measured at the lower of cost or net realizable value for entities using first-in, first-out or average cost methods. ASU 2015-11 should be applied prospectively and is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. We adopted this standard on January 1, 2017, with no material impact on our financial statements. In March 2016, the FASB issued ASU No. 2016-09,Compensation—Stock Compensation (ASU 2016-09), which serves to simplify the accounting for share-based payment transactions. ASU 2016-09 includes guidance on several aspects of the accounting for share-based payments, including the income tax consequences, forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. We adopted this standard on January 1, 2017. Upon adoption of ASU 2016-09, we began to recognize excess tax benefits as income tax benefits on our consolidated statements of operations. Previously, we recognized such amounts in additional paid-in capital on our consolidated balance sheets. Additionally, on January 1, 2017, we established an accounting policy election to account for forfeitures of share-based awards when they occur. Upon adoption, we recognized a cumulative-effect adjustment for the removal of the forfeiture estimate with respect to awards that were continuing to vest as of January 1, 2017. The adjustment resulted in a decrease to retained earnings of $5.8 million, which is net of a $3.2 million tax benefit. The guidance also requires that we classify excess tax benefits as an operating activity in our consolidated statements of cash flows, whereas we previously classified such amounts as a financing activity. These amounts are now classified as "other" in our cash flows from operating activities. We have adopted ASU 2016-09 on a prospective basis and, as such, prior periods have not been adjusted, with the exception of the cumulative-effect adjustment to retained earnings for the removal of the forfeiture estimate, which was adopted on a modified retrospective basis. Refer to Note 9—Share-Based Compensation. In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers (ASU 2014-09), and subsequent clarifying guidance. The new standard supersedes the revenue recognition requirements in Topic 605,Revenue Recognition (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers an amount that reflects the consideration to which the entity expects to be entitled to, in exchange for those goods or services. We adopted the new standard on January 1, 2018, using the modified retrospective approach, applied only to contracts that were not completed as of January 1, 2018. Upon adoption, we changed the timing of revenue recognition for sales of Adcirca to recognize revenue at the time Adcirca is shipped, i.e., when control of Adcirca is transferred to a distributor upon shipment from a Lilly distribution center. Previously, we recognized sales of Adcirca when Adcirca was delivered to distributors. This change did not result in an adjustment to amounts previously recognized as revenue under Topic 605 as all shipments had reached the distributor as of December 31, 2017. Overall, the adoption did not impact the amounts reported in our financial statements and there were no other significant changes impacting the timing or measurement of our revenue or our business processes and controls.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)3. Recently Issued Accounting Standards (Continued) In January 2016, the FASB issued ASU No. 2016-01,Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which requires equity investments to be measured at fair value through net income. Equity investments that are accounted for under the equity method are not impacted. ASU 2016-01 provides that equity investments without readily determinable fair values can be valued at cost minus impairment using a simplified impairment assessment that utilizes qualitative assessments. ASU 2016-01 requires separate presentation of the financial assets and liabilities by category and form. ASU 2016-01 should be applied prospectively and will be effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. We adopted the new standard on January 1, 2018, with no material impact to our financial statements. In February 2016, the FASB issued ASU No. 2016-02,Leases (ASU 2016-02), which requires that lease assets and lease liabilities be recognized on the balance sheet. ASU 2016-02 also requires additional quantitative and qualitative disclosures that provide the amount, timing, and uncertainty of cash flows relating to lease arrangements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, using a modified retrospective approach. The modified retrospective approach requires retrospective application to the earliest period presented in the respective financial statements, provides certain practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. Early adoption is permitted. We are currently evaluating the effect of adoption on our financial statements. In August 2016, the FASB issued ASU No. 2016-15,Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which reduces existing diversity in the classification of certain cash receipts and cash payments on the statements of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. We adopted the new standard on January 1, 2018, with no material impact to our financial statements. In October 2016, the FASB issued ASU No. 2016-16,Income Taxes—Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which requires that an entity recognize the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017 using a modified retrospective approach through a cumulative adjustment to retained earnings as of the beginning of the period of adoption. We adopted the new standard on January 1, 2018, with no material impact to our financial statements. In January 2017, the FASB issued ASU No. 2017-01,Business Combinations-Clarifying the Definition of a Business (ASU 2017-01). This update narrows the definition of a business by providing a screen to determine when an integrated set of assets and activities is not a business. The screen specifies that an integrated set of assets and activities is not a business if substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single asset or a group of similar identifiable assets. ASU 2017-01 should be applied prospectively and is effective for annual reporting periods beginning after December 15, 2017, and for interim periods within those fiscal years. We adopted the new standard on January 1, 2018, with no material impact to our financial statements.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)3. Recently Issued Accounting Standards (Continued) In January 2017, the FASB issued ASU No. 2017-04,Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies how an entity is required to test goodwill for impairment. Goodwill impairment will be measured by the amount by which a reporting unit's carrying value exceeds its fair value, with the amountportion of impairmentthe unrealized gains and losses that are not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, and must be adopted oncredit-related included as a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adoption on our financial statements. In March 2017, the FASB issued ASU No. 2017-07,Compensation-Retirement Benefits (ASU 2017-07), which improves the presentation of net periodic pension cost and net periodic post-retirement benefit cost. ASU 2017-07 requires employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit costoperating expense along with other employee compensation costs. Under ASU 2017-07, the service cost component of net benefit cost is eligible for capitalization. Additionally, this update further requires other components of net benefit cost to be included in non-operating expenses. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. An entity is to apply the change in income statement presentation retrospectively, and the change in capitalized benefit cost prospectively. We adopted the new standard on January 1, 2018, with no material impact to our financial statements.4. InvestmentsMarketable InvestmentsAvailable-for-Sale Investments Marketable investments classified as available-for-salestockholders’ equity, until realized. Available-for-sale debt securities consisted of the following (in millions): Amortized
Cost Gross
Unrealized
Losses Fair
Value $ 726.5 $ (3.0 ) $ 723.5 13.9 — 13.9 $ 740.4 $ (3.0 ) $ 737.4 $ 41.7 194.6 501.1 $ 737.4 2022 Annual Report F-16 As of December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government and agency securities $ 2,697.8 $ 0.1 $ (58.9) $ 2,639.0 Corporate debt securities 555.6 — (16.0) 539.6 $ 3,253.4 $ 0.1 $ (74.9) $ 3,178.6 Reported under the following captions in our consolidated balance sheets: Cash and cash equivalents $ 15.6 Current marketable investments 1,846.8 Non-current marketable investments 1,316.2 $ 3,178.6 As of December 31, 2021 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government and agency securities $ 2,178.9 $ 2.0 $ (7.3) $ 2,173.6 Corporate debt securities 482.5 0.6 (2.0) 481.1 Total $ 2,661.4 $ 2.6 $ (9.3) $ 2,654.7 Reported under the following captions in our consolidated balance sheets: Cash and cash equivalents $ 39.3 Current marketable investments 965.5 Non-current marketable investments 1,649.9 Total $ 2,654.7 had norecorded the $70.0 million receivable within other current assets in our consolidated balance sheets.investmentsdebt securities that were in an unrealized loss position as of December 31, 2016.Table2022 and December 31, 2021, aggregated by investment category and length of ContentsUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)4. Investments (Continued) The following table summarizestime that the contractual maturities of available-for-sale marketable investmentsindividual securities have been in a continuous loss position (in millions):Less than 12 months 12 months or longer Total As of December 31, 2022 Fair Value Gross
Unrealized
LossesFair Value Gross
Unrealized
LossesFair Value Gross
Unrealized
LossesU.S. government and agency securities $ 1,324.6 $ (24.2) $ 1,111.6 $ (34.7) $ 2,436.2 $ (58.9) Corporate debt securities 254.2 (6.7) 274.1 (9.3) 528.3 (16.0) Total $ 1,578.8 $ (30.9) $ 1,385.7 $ (44.0) $ 2,964.5 $ (74.9) December 31, 2017 Amortized
Cost Fair
Value $ 236.7 $ 236.3 503.7 501.1 $ 740.4 $ 737.4 Less than 12 months 12 months or longer Total As of December 31, 2021 Fair Value Gross
Unrealized
LossesFair Value Gross
Unrealized
LossesFair Value Gross
Unrealized
LossesU.S. government and agency securities $ 1,729.9 $ (7.3) $ — $ — $ 1,729.9 $ (7.3) Corporate debt securities 352.3 (2.0) — — 352.3 (2.0) Total $ 2,082.2 $ (9.3) $ — $ — $ 2,082.2 $ (9.3) Held-to-Maturity Investments Our currentlong-term marketable investments included $29.3 millionDecember 31, 2021, we held 411 and $30.1 million of investments classified as held-to-maturity251 available-for-sale debt securities, respectively, that were in an unrealized loss position. In assessing whether the decline in fair value as of December 31, 20172022 of any of these securities resulted from a credit loss, we consulted with our investment managers and 2016, respectively. Marketable investments classified as held-to-maturityreviewed the credit ratings for each security. We believe that these unrealized losses are compriseda direct result of government-sponsored enterprisesthe current interest rate environment and corporate notes and bonds.do not represent an indication of credit loss. We do not intend to sell these securities, northe investments in unrealized loss positions prior to their maturity and it is itnot more likely than not that we will be required to sell them prior to thethese investments before recovery of their amortized cost basis. Furthermore, we do not believe that theseThere were no impairments due to credit loss on our available-for-sale debt securities expose us to undue market risk or counterparty credit risk. As such, we do not consider these securities to be other than temporarily impaired.F-17 United Therapeutics, a public benefit corporation held-to-maturityavailable-for-sale debt securities (in millions). Actual maturities may differ from contractual maturities because the issuers of certain of these debt securities have the right to call the securities or prepay their obligations under the securities with or without penalties. As of December 31, 2022 Amortized Cost Fair Value Due within one year $ 1,890.7 $ 1,862.4 Due in one to three years 1,362.7 1,316.2 Total $ 3,253.4 $ 3,178.6 (in millions): As of December 31, 2017 Amortized Cost Fair Value $ 27.7 $ 27.7 1.6 1.6 $ 29.3 $ 29.3 Held at Cost2017,2022 and 2021, we maintained non-controlling equity investments in privately-held companies of approximately $184.0$28.5 million and $31.1 million, respectively, in the aggregate. These investments are initially held at cost because we do not have the ability to exercise significant influence over the companiesWe made a payment of $1.5 million for an investment in which these investments were made and the fair values of these investments are not readily determinable. Duringa privately-held company during the year ended December 31, 2017, we2022. No such payments were made payments of $60.4 million for investments held at cost. We include our investments held at cost within other non-current assets on our consolidated balance sheets. These investments are subject to a periodic impairment review and if they are deemed to be other-than-temporarily impaired,during the investment is measured and recorded at fair value. During the yearyears ended December 31, 2017,2021 and 2020.$49.6an aggregate increase of zero, zero, and $25.5 million, respectively, in the value of our investments. These gains were recorded within other (expense) income, net in our consolidated statements of operations.cost method investments in privately-held companies.Entity2022 Annual Report F-18 April 2017, we made a $7.5 million minority investment in a privately-held company. In addition to our investment,November 2019, we entered into a supply agreement with an exclusive license, developmentaffiliate of DEKA Research & Development Corporation (DEKA) to manufacture and commercializationsupply the Remunity® Pump to us. Under the terms of the supply agreement,Table we reimburse all of ContentsUNITED THERAPEUTICS CORPORATIONNotesthe affiliate’s costs to Consolidated Financial Statements (Continued)4. Investments (Continued)(manufacture and supply the License Agreement)Remunity Pump. We determined that the affiliate is a VIE as we are the primary customer of the affiliate and the affiliate currently relies on our reimbursement of its costs to sustain its operations. We have determined we are not the primary beneficiary of the affiliate as we do not have the power to direct or control its significant activities related to the manufacturing of medical devices. Accordingly, we have not consolidated the affiliate’s results of operations and financial position with this company. The License Agreement entitlesours. As of December 31, 2022 and 2021, our consolidated balance sheets included $9.2 million and $10.6 million of assets, respectively, related to the supply agreement. As of December 31, 2022 and 2021, our consolidated balance sheets included a $2.0 million liability for our obligation to reimburse costs related to the supply agreement. While the terms of the supply agreement expose us to control rights sufficientvarious future risks of loss given our responsibility to require usreimburse all costs incurred by the affiliate to manufacture and supply the Remunity Pump, we believe that our maximum exposure to loss as of December 31, 2022 as a result of our involvement with the affiliate is $9.2 million, the amount of assets related to the supply agreement noted above.operations of this company. The control rights relate to additional research and development funding that we may provide to this company over a period of six years. We are also entitled to representation on a joint development committee that approves the company's use of funding provided by us. In 2017, we provided $9.9 million of financial support to the company. We have the right, at any time and for any reason, to cease our funding of this company's activities.2017, our consolidated balance sheet included $11.6 million of cash maintained by this company that can only be used to settle its obligations. Additionally,2022, our consolidated balance sheets included an $8.8 million in-process research and development intangible asset, $3.4$72.9 million of goodwill and $8.3 million of preferred stockassets due to the consolidation of this company. The preferred stock is recordedthese VIEs included within property, plant, and equipment, net. Upon consolidating the VIEs, which were not deemed a business as defined in temporary equity on our consolidated balance sheets. During the year ended December 31, 2017, this company incurred a netASC 805, Business Combinations, no gain or loss of $5.1 million. This company's creditorswas recognized. These VIEs have no recourse against our assets and general credit.F-19 United Therapeutics, a public benefit corporation rankclassify these assets and liabilities within the fair value hierarchy. OtherOur other current assets and other current liabilities have fair values that approximate their carrying values.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)5. Fair Value Measurements (Continued) As of December 31, 2022 Level 1 Level 2 Level 3 Balance Assets $ 459.6 $ — $ — $ 459.6 75.6 — — 75.6 — 2,639.0 — 2,639.0 — 539.6 — 539.6 30.7 — — 30.7 — — 0.1 0.1 Total assets $ 565.9 $ 3,178.6 $ 0.1 $ 3,744.6 Liabilities — — 19.7 19.7 Total liabilities $ — $ — $ 19.7 $ 19.7 As of December 31, 2017 Level 1 Level 2 Level 3 Balance $ 217.9 $ — $ — $ 217.9 — 25.2 — 25.2 — 723.5 — 723.5 — 18.0 — 18.0 $ 217.9 $ 766.7 $ — $ 984.6 — — 12.8 12.8 $ — $ — $ 12.8 $ 12.8 As of December 31, 2021 Level 1 Level 2 Level 3 Balance Assets $ 516.7 $ — $ — $ 516.7 — 2,173.6 — 2,173.6 — 481.1 — 481.1 70.4 — — 70.4 — — 1.2 1.2 Total assets $ 587.1 $ 2,654.7 $ 1.2 $ 3,243.0 Liabilities — — 20.8 20.8 Total liabilities $ — $ — $ 20.8 $ 20.8 As of December 31, 2016 Level 1 Level 2 Level 3 Balance $ 534.4 $ — $ — $ 534.4 — 30.1 — 30.1 $ 534.4 $ 30.1 $ — $ 564.5 — — 10.4 10.4 $ — $ — $ 10.4 $ 10.4 on the accompanying in our consolidated balance sheets. Refer to Note 4—Investments—Marketable Investments—Available-for-Sale Debt Securities for further information. The fair value of these securities is principally measured or corroborated by trade data for identical securities infor which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded.non-current liabilities on the accompanyingcurrent marketable investments in our consolidated balance sheets. The fair value of these securities is based on quoted market prices for identical instruments in active markets. During the years ended December 31, 2022 and 2021, we recognized $35.9 million and $50.8 million of net unrealized and realized losses in the aggregate and net unrealized and realized gains in the aggregate, respectively, on these securities. We recorded these gains and losses in our consolidated statements of operations within other (expense) income, net. Refer to Note 4—Investments—Marketable Investments—Investments in Equity Securities with Readily Determinable Fair Values.(DCFs)(DCFs). The DCFs incorporate Level 3 inputs, including estimated discount rates, that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, in part, based on the requirements specific to each acquisition agreement. The fair value of our contingent consideration liabilities decreased by $1.1 million from December 31, 2021 to December 31, 2022. The gain was recorded within research and development in our consolidated statements of operations.UNITED THERAPEUTICS CORPORATIONNotesFinancial Instruments2022 Annual Report F-20 Consolidated Financial Statements (Continued) As of December 31, 2022 2021 Accounts payable $ 4.1 $ 3.8 Accrued expenses: Sales-related (royalties, rebates, and fees) 116.5 85.3 Payroll-related 66.5 53.6 Research and development-related 22.7 19.0 Other 20.1 12.9 Total accrued expenses $ 225.8 $ 170.8 Total accounts payable and accrued expenses $ 229.9 $ 174.6 As of
December 31, 2017 2016 $ 8.4 $ 8.1 104.6 55.7 34.6 30.6 23.5 9.8 $ 162.7 $ 96.1 $ 171.1 $ 104.2 Unsecured RevolvingFacilityJanuary 2016,March 2022, we entered into a credit agreement (the 2016 2022Credit Agreement)Agreement) with Wells Fargo Bank, National Association (Wells Fargo)(Wells Fargo), as administrative agent and a swingline lender, and various other lender parties, providing forwhich provides for: (1) an unsecured revolving credit facility of up to $1.0 billion. In$1.2 billion; and (2) a second unsecured revolving credit facility of up to $800.0 million (which facilities may, at our request, be increased by up to $500.0 million in the aggregate subject to obtaining commitments from existing or new lenders for such increase and other conditions). The facilities will mature five years after the closing date of the 2022 Credit Agreement on March 31, 2027, subject to the lenders’ ability to extend the maturity date by one year if we request such an extension in accordance with the terms of the 20162022 Credit Agreement, in January 2017 and in January 2018, we extended the maturity dateup to a maximum of the 2016 Credit Agreement by one year to January 2022 and January 2023, respectively.20162022 Credit Agreement bear interest at either the LIBOR ratean adjusted Term Secured Overnight Finance Rate (Term SOFR) or a fluctuating base rate, in each case, plus an applicable margin determined on a quarterly basis based on our consolidated ratio of total indebtedness to EBITDA (as calculated in accordance with the 20162022 Credit Agreement).June 1, 2017,March 31, 2022, we borrowed $250.0$800.0 million under this facilitythe 2022 Credit Agreement, and used the funds to initiate an accelerated share repurchase program. Refer to Note 10—Stockholders' Equity—Share Repurchasesrepay outstanding indebtedness under the 2018 Credit Agreement as discussed below under 2018 Credit Agreement.no longerdo not intend to repay the full outstanding balanceany portion of this amount within one year, the outstanding balance has been reclassified from short-term to long-term within the consolidated balance sheet. We elected to have interest on this draw calculated at LIBOR plus an applicable margin. During the year ended December 31, 2017, we recorded $7.1 million of interest expense related to the credit facility.20162022 Credit Agreement contains customary events of default and customary affirmative and negative covenants. As of December 31, 2017,2022, we were in compliance with suchthese covenants. Lung Biotechnology PBC is our only subsidiary that guarantees our obligations under the 20162022 Credit Agreement though, from time to time, one or more of our other subsidiaries may be required to guarantee suchour obligations.Convertible Note Hedge and Warrant Transactions In October 2011, we issued $250.0 million in aggregate principal value 1.0 percent Convertible Senior Notes due September 15, 2016 (Convertible Notes). Upon maturity of the Convertible Notes in September 2016, we fulfilled all remaining settlement and repayment obligations.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)7. Debt (Continued)Convertible Notes, we sold to Deutsche Bank AG London (DB London) warrants to acquire up to approximately 5.22022 Credit Agreement. As of December 31, 2022, $3.2 million shares ofwas recorded in other current assets and $10.5 million in other non-current assets in our common stock at a strike price of $67.56 per share. consolidated balance sheets. warrants expired incrementally on a series of expiration dates during December 2016 and January 2017. The warrants were settled on a net-share basis. As the price of our common stock exceeded the strike price of the warrants on each of the series of related incremental expiration dates, we delivered 2.8 million shares of common stock previously held as treasury stock to DB London, including 1.7 million shares that were delivered during the first quarter of 2017.Interest Expense Details of interest expense presented onreported in our consolidated statements of operations are as follows (in millions): Year Ended
December 31, 2017 2016 2015 $ 7.1 $ 3.2 $ — — 0.1 3.4 1.9 0.6 1.3 $ 9.0 $ 3.9 $ 4.7 issuance costsup to $1.0 billion; and (2) a second unsecured revolving credit facility of up to $500.0 million.F-21 United Therapeutics, a public benefit corporation our 2016the early termination of the 2018 Credit Agreement.8. Temporary Equity Temporary equity includes securities that: (1) have redemption features that are outside our control; (2) are not classified as an asset or liability; (3) are excluded from permanent stockholders' equity; and (4) are not mandatorily redeemable. Amounts included in temporary equity relate to securities that are redeemable at a fixed or determinable price.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)8. Temporary Equity (Continued) Components comprising the carrying value of temporary equity include the following (in millions): As of
December 31, 2017 2016 $ 10.9 $ 10.9 8.3 — $ 19.2 $ 10.9 9.8. Share-Based Compensation2017,2022, we have two shareholder-approved equity incentive plans: the United Therapeutics Corporation Amended and Restated Equity Incentive Plan (the 1999 Plan)Plan) and the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (the (as amended to date, the 2015 Plan)Plan). The 2015 Plan was approved by our shareholders in June 2015 and provides for the issuance of up to 6,150,00011,500,000 shares of our common stock pursuant to awards granted under the 2015 Plan. As a result of the approvalPlan, which includes 500,000 shares added pursuant to an amendment and restatement of the 2015 Plan noapproved by our shareholders in June 2022. No further awards will be granted under the 1999 Plan. We also have one equity incentive plan, the United Therapeutics Corporation 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), that has not been approved by our shareholders, as permitted by the Nasdaq Stock Market rules. The 2019 Inducement Plan was approved by our Board of Directors in February 2019 and provides for the issuance of up to 99,000 shares of our common stock under awards granted to newly-hired employees. Currently, we grant equity-based awards includingto employees and members of our Board of Directors in the form of stock options and restricted stock units (RSUs)(RSUs) under these plans.the 2015 Plan, and we may grant RSUs to newly-hired employees under the 2019 Inducement Plan. Refer to the sections entitledEmployee Stock Options andRestricted Stock UnitsRSUs below.Share Tracking Awards Plan, adopted in June 2008 (2008 STAP) and the United Therapeutics Corporation 2011 Share Tracking Awards Plan adopted in March 2011 (2011 STAP)(the STAP). We refer to the 2008 STAP and the 2011 STAP collectively as the "STAP" and awards granted and/or outstanding under either of these plansthe STAP as "STAP awards."STAP awards. Refer to the section entitledShare TrackingSTAP Awards Plans below. We discontinued the issuance of STAP awards in June 2015, when our shareholders approved the 2015 Plan.(ESPP)(ESPP), which has beenis structured to comply with Section 423 of the Internal Revenue Code. Refer to the section entitledEmployee Stock Purchase Plan sectionESPP below.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)9. Share-Based Compensation (Continued)(benefit) recognized in our consolidated statements of operations (in millions): Year Ended December 31, 2022 2021 2020 Stock options $ 22.6 $ 25.4 $ 44.0 RSUs 35.7 24.7 20.5 STAP awards 46.7 86.6 97.8 ESPP 1.8 1.8 1.5 Total share-based compensation expense before tax $ 106.8 $ 138.5 $ 163.8 Share-based compensation capitalized as part of inventory $ 1.3 $ 1.0 $ 1.0 Year Ended December 31, 2017 2016 2015 $ 43.0 $ 24.8 $ 4.9 2.2 1.1 — 27.1 (15.2 ) 274.2 1.2 1.4 1.2 $ 73.5 $ 12.1 $ 280.3 $ 0.4 $ 0.2 $ 7.1 As a result of the adoption of ASU 2016-09, we established an accounting policy election to account for forfeitures of share-based awards and STAPs when they occur. Upon adoption, we recognized a cumulative-effect adjustment for the removal of the forfeiture estimate with respect to awards that were continuing to vest as of January 1, 2017. The adjustment decreased retained earnings by $5.8 million, net of tax. Refer to Note 3—Recently Issued Accounting Standards.Employee Stock Options In March 2017, we began issuing stock options with performance conditions to certain executives under the 2015 Plan. The stock options have vesting conditions tied to the achievement of specified performance criteria, which have target performance levels that span from one to three years. Upon the conclusion of the performance period, the performance level achieved will be measured and the ultimate number of shares that may vest will be determined. Share-based compensation expense for these awards is recorded ratably over their vesting period, depending on the specific terms of the award and achievement of the specified performance criteria. During 2017, we granted 0.9 million stock options with performance vesting conditions with a total grant date fair value of $53.9 million based on achievement of target performance levels. During the year ended December 31, 2017, we recorded $16.7 million of share-based compensation expense related to these awards.Employee Stock Optionsstock options are provided below:2017, 20162022, 2021, and 2015,2020, we used historical datathe simplified approach to develop this input.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)9. Share-Based Compensation (Continued)2022 Annual Report F-22 weighted-averageweighted average assumptions were used in estimating the fair value of stock options granted to employees during the twelve months ended December 31, 2017, December 31, 2016,2022, 2021, and December 31, 2015: Year Ended
December 31, 2017 2016(1) 2015(1) 6.1 5.8 5.8 35.7 % 34.8 % 33.1 % 2.2 % 1.6 % 2.0 % 0.0 % 0.0 % 0.0 % Year Ended December 31, 2022 2021 2020 Expected term of awards (in years) 5.7 5.7 5.6 Expected volatility 32.5 % 32.5 % 33.4 % Risk-free interest rate 2.7 % 1.0 % 0.5 % Expected dividend yield 0.0 % 0.0 % 0.0 % statusactivity and activitystatus of stock options under our equity incentive plans during the year ended December 31, 2022 is presented below: Number of Options Weighted Average Exercise Price Weighted Average Remaining
Contractual Term (in Years)Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2022 7,317,978 $ 126.73 Granted 40,029 213.18 Exercised (747,485) 118.26 Forfeited (2,503) 130.50 Outstanding as of December 31, 2022 6,608,019 $ 128.21 3.8 $ 990.4 Exercisable as of December 31, 2022 5,219,385 $ 126.81 3.6 $ 789.6 Unvested as of December 31, 2022 1,388,634 $ 133.45 4.4 $ 200.8 Options Weighted-Average
Exercise Price Weighted Average
Remaining
Contractual Term
(in Years) Aggregate
Intrinsic Value
(in millions) 4,459,291 $ 104.97 1,958,843 145.72 (461,465 ) 86.65 (78,346 ) 133.55 5,878,323 $ 119.61 7.1 $ 171.2 3,082,847 $ 103.23 5.5 $ 142.1 2,795,476 $ 137.67 8.9 $ 29.0 2017,2022, was $56.07, $42.59$75.87, $56.69, and $60.70,$34.56, respectively. The total fairUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)9. Share-Based Compensation (Continued)2017,2022, was $13.1$16.3 million, $19.9$50.4 million, and zero,$73.5 million, respectively. Year Ended December 31, 2022 2021 2020 Cost of sales $ — $ 0.1 $ 0.5 Research and development 0.3 0.5 2.0 Selling, general, and administrative 22.3 24.8 41.5 Share-based compensation expense before taxes 22.6 25.4 44.0 Related income tax benefit (0.6) (0.8) (3.1) Share-based compensation expense, net of taxes $ 22.0 $ 24.6 $ 40.9 is as follows (in millions): Year Ended December 31, 2017 2016 2015 $ 1.3 $ 0.5 $ — 3.7 1.4 — 38.0 22.9 4.9 43.0 24.8 4.9 (15.8 ) (9.1 ) (1.8 ) $ 27.2 $ 15.7 $ 3.1 Selling, general and administrative expense for the year ended December 31, 2016 includes approximately $9.8 million of costs related to the accelerated vesting of stock options associated with the departure of a corporate officer during the second quarter of 2016. As of December 31, 2017, the unrecognized compensation cost was $101.8$6.2 million. Unvested outstanding stock options as of December 31, 20172022 had a weighted average remaining vesting period of 2.30.6 years. Year Ended December 31, 2017 2016 2015 461,465 243,624 985,583 $ 39.9 $ 7.7 $ 39.3 $ 29.3 $ 21.9 $ 120.3 $ — $ 5.9 $ 37.4 Year Ended December 31, 2022 2021 2020 Number of options exercised 747,485 405,536 466,731 Cash received from options exercised $ 88.4 $ 50.0 $ 33.8 Total intrinsic value of options exercised $ 97.5 $ 26.6 $ 22.9 $ 21.6 $ 5.3 $ 5.4
operations within income tax expense.Restricted Stock UnitsF-23 United Therapeutics, a public benefit corporation restricted stock units under the 2015 PlanRSUs to our non-employee directors. In October 2017, we also began issuing restricted stock unitsRSUs to our employees. Over time, we expect to increase the percentage of our equity awards made to employees in the form of restricted stock units, instead of stock options. Each restricted stock unitRSU entitles the recipient to receive one share of our common stock upon vesting. We measure the fair value of restricted stock unitsRSUs using the stock price on the date of grant. Share-based compensation expense for the restricted stock unitsRSUs is recorded ratably over their vesting period. During2017, we granted 21,290 restricted stock units under the 2015 Plan with a weighted average grant date fair value per restricted stock unit of $131.22. The restricted2022 is presented below: Number of RSUs Weighted Average Grant Date Fair Value Unvested as of January 1, 2022 390,539 $ 129.76 Granted 683,280 205.48 Vested (201,690) 125.03 Forfeited (30,878) 154.78 Unvested as of December 31, 2022 841,251 $ 191.48 UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)9. Share-Based Compensation (Continued)stock units have an aggregate grant date fair value of $2.8 million. We recorded $2.2 million in share-based compensation expense for the year ended December 31, 2017 related to restricted stock units. Therestricted stock units grantedRSUs is reflected in selling, general and administrative expense on the statements of operations. Year Ended December 31, 2022 2021 2020 Cost of sales $ 3.1 $ 2.1 $ 1.6 Research and development 13.6 8.2 7.0 Selling, general, and administrative 19.0 14.4 11.9 Share-based compensation expense before taxes 35.7 24.7 20.5 Related income tax benefit (8.6) (5.9) (4.8) Share-based compensation expense, net of taxes $ 27.1 $ 18.8 $ 15.7 2017,2022, unrecognized compensation cost related to the grant of restricted stock unitsRSUs was $1.6$131.5 million. Unvested outstanding restricted stock unitsRSUs as of December 31, 20172022 had a weighted average remaining vesting period of 1.13.8 years.Share Tracking Planstenthtenth anniversary of the grant date, and in most cases, they vest in equal increments on each anniversary of the grant date over a four-year period. TheWe discontinued the issuance of STAP liability includes vested awards and awards that are expected to vest. We recognize expense for awards that are expected to vest during the vesting period.of theassociated with outstanding STAP liabilityawards was $241.3$80.8 million and $268.9$102.4 million atas of December 31, 20172022 and 2016,2021, respectively, all of which $1.2 million and $74.1 million, respectively, has beenwas classified as other non-current liabilities ona current liability in our consolidated balance sheets based on their vesting terms.Employee Stock Options section above.2022 Annual Report F-24 As of December 31, 2017 2016(1) 2015(1) 1.8 2.5 3.4 31.7 % 36.1 % 35.3 % 1.8 % 1.4 % 1.4 % 0.0 % 0.0 % 0.0 % As of December 31, 2022 2021 2020 Expected term of awards (in years) 1.0 1.3 1.7 Expected volatility 33.5 % 30.0 % 34.8 % Risk-free interest rate 4.7 % 0.4 % 0.1 % Expected dividend yield 0.0 % 0.0 % 0.0 % $147.95, $143.43,$278.09, $216.08, and $156.61$151.79 on December 31, 2017, 20162022, 2021, and 2015,2020, respectively.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)9. Share-Based Compensation (Continued)statusactivity and activity of the STAP is presented below: Number of
Awards Weighted-Average
Exercise Price Weighted Average
Remaining
Contractual Term
(Years) Aggregate
Intrinsic Value
(in millions) 5,113,838 $ 91.51 — — (887,540 ) 69.33 (129,904 ) 113.84 4,096,394 $ 95.60 5.6 $ 232.6 2,419,103 $ 98.93 5.5 $ 129.7 1,677,291 $ 90.80 5.8 $ 102.9 The weighted average grant-date fair valuestatus of STAP awards granted during the year ended December 31, 2015 was $58.52. Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2022 1,093,560 $ 123.89 Granted — — Exercised (527,606) 107.69 Forfeited (10,354) 55.86 Outstanding as of December 31, 2022 555,600 $ 140.54 1.9 $ 76.4 Exercisable as of December 31, 2022 555,600 $ 140.54 1.9 $ 76.4 Unvested as of December 31, 2022 — $ — — $ — (benefit) recognized in connection with the STAP awards is as follows (in millions):Year Ended December 31, 2022 2021 2020 Cost of sales $ 1.9 $ 3.5 $ 4.9 Research and development 9.0 15.0 19.9 Selling, general, and administrative 35.8 68.1 73.0 Share-based compensation expense before taxes 46.7 86.6 97.8 Related income tax benefit (8.6) (14.7) (19.3) Share-based compensation expense, net of taxes $ 38.1 $ 71.9 $ 78.5 Year Ended December 31, 2017 2016 2015 $ 1.2 $ — $ 8.7 4.1 (11.8 ) 87.4 21.8 (3.4 ) 178.1 27.1 (15.2 ) 274.2 (10.0 ) 5.6 (103.5 ) $ 17.1 $ (9.6 ) $ 170.7 exercisesawards exercised during the years ended December 31, 2017, 20162022, 2021, and 20152020 was $63.4$68.2 million, $69.5$81.1 million, and $248.8$26.1 million, respectively.Employee Stock Purchase PlanUnited Therapeutics Corporation Employee Stock Purchase Plan (ESPP),ESPP, which has beenis structured to comply with Section 423 of the Internal Revenue Code. The ESPP provides eligible employees with the right to purchase shares of our common stock at a discount through elective accumulated payroll deductions at the end of each offering period. Offering periods, which began in 2012, occur in consecutive six-month periods commencing on September 5th and March 5th of each year. Eligible employees may contribute up to 15 percent of their base salary, subject to certain annual limitations as defined in the ESPP. The purchase price of the shares is equal to the lower of 85 percent of the closing price of our common stock on either the first or last trading day of a given offering period. In addition, the ESPP provides that no eligible employee may purchase more than 4,000 shares during any offering period. The ESPP has a 20-year term and limits the aggregate number of shares that can be issued under the ESPP to 3.0 million.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)10. Stockholders'F-25 United Therapeutics, a public benefit corporation Year Ended December 31, 2017 2016 2015 $ 417.9 $ 713.7 $ 651.6 44.0 43.8 46.0 �� — — 0.9 0.1 2.3 3.0 0.8 0.7 1.3 44.9 46.8 51.2 $ 9.50 $ 16.29 $ 14.17 $ 9.31 $ 15.25 $ 12.72 3.3 5.2 3.8 Year Ended December 31, 2022 2021 2020 Numerator: Net income $ 727.3 $ 475.8 $ 514.8 Denominator: Weighted average outstanding shares — basic 45.5 44.9 44.2 3.0 2.4 0.4 48.5 47.3 44.6 Net income per common share: Basic $ 15.98 $ 10.60 $ 11.65 Diluted $ 15.00 $ 10.06 $ 11.54 — 0.1 6.6 restricted stock units and warrantsRSUs have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive. Under the convertible note hedge agreement we entered into in connection with our Convertible Notes, we were entitled to receive shares required to be issued to investors upon conversion of our Convertible Notes. Since related shares used to compute dilutive earnings per share would be anti-dilutive, they have been excluded from the calculation above.Share Repurchases In April 2017, our Board of Directors approved a share repurchase program authorizing up to $250.0 million in aggregate repurchases of our common stock. Pursuant to this authorization, in May 2017, we paid $250.0 million to enter into an accelerated share repurchase agreement (ASR) with Citibank, N.A. (Citibank). Pursuant to the terms of the ASR, in June 2017, Citibank delivered to us approximately 1.7 million shares of our common stock, representing the minimum number of shares we were entitled to receive under the ASR. Upon termination of the ASR in September 2017, Citibank delivered to us approximately 0.3 million additional shares of our common stock. The ASR was accounted for as an equity transaction and the shares we repurchased under the ASR were included in treasury stock when the shares were received.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)10. Stockholders' Equity (Continued)Shareholder Rights Plan In June 2008, we entered into an Amended and Restated Rights Agreement with The Bank of New York as Rights Agent (the Plan), which amended and restated our original Rights Agreement dated December 17, 2000. The Plan, as amended and restated, extended the expiration date of the Preferred Share Purchase Rights (Rights) from December 29, 2010 to June 26, 2018, and increased the purchase price of each Right from $64.75 to $400.00, respectively. Each Right entitles holders to purchase one one-thousandth of a share of our Series A Junior Participating Preferred Stock. Rights are exercisable only upon our acquisition by another company, or commencement of a tender offer that would result in ownership of 15 percent or more of the outstanding shares of our voting stock by a person or group (as defined under the Plan) without our prior express written consent. As of December 31, 2017, we have not issued any shares of our Series A Preferred Stock.Foreign Currency Translation Losses Unrealized Gains and (Losses) on Available-for-Sale Securities Total Balance, January 1, 2022 $ (0.5) $ (17.9) $ (4.6) $ (23.0) Other comprehensive (loss) income before reclassifications 18.7 — (51.8) (33.1) Amounts reclassified from accumulated other comprehensive loss 0.6 — — 0.6 Net current-period other comprehensive (loss) income 19.3 — (51.8) (32.5) Balance, December 31, 2022 $ 18.8 $ (17.9) $ (56.4) $ (55.5) Defined
Benefit Pension
Plan(1) Foreign Currency
Translation
Losses Unrealized Gains
and (Losses) on
Available-for-Sale
Securities Total $ 1.3 $ (18.1 ) $ — $ (16.8 ) (1.7 ) 0.2 (1.9 ) (3.4 ) 0.6 — — 0.6 (1.1 ) 0.2 (1.9 ) (2.8 ) $ 0.2 $ (17.9 ) $ (1.9 ) $ (19.6 ) Foreign Currency Translation Losses Unrealized Gains and (Losses) on Available-for-Sale Securities Total Balance, January 1, 2021 $ (6.7) $ (17.9) $ 10.4 $ (14.2) Other comprehensive (loss) income before reclassifications 5.6 — (15.0) (9.4) Amounts reclassified from accumulated other comprehensive loss 0.6 — — 0.6 Net current-period other comprehensive (loss) income 6.2 — (15.0) (8.8) Balance, December 31, 2021 $ (0.5) $ (17.9) $ (4.6) $ (23.0) UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)10. Stockholders' Equity (Continued) Defined
Benefit Pension
Plan(1) Foreign Currency
Translation
Losses(2) Unrealized Gains
and (Losses) on
Available-for-Sale
Securities Total $ (5.3 ) $ (15.1 ) $ — $ (20.4 ) 6.0 (3.0 ) — 3.0 0.6 — — 0.6 6.6 (3.0 ) — 3.6 $ 1.3 $ (18.1 ) $ — $ (16.8 ) 11.2022 Annual Report F-26 The Tax Cuts and Jobs Act (Tax Reform) was enacted on December 22, 2017 and has multiple provisions that impact our tax expense. The significant impacts of Tax Reform include a reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent, a requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, additional limitations on deductions for executive compensation, the opportunity to fully expense (take 100 percent bonus depreciation) qualified property, reduction of the Orphan Drug Credit, repeal of the Section 199 deduction for domestic manufacturing activities, and creation of new taxes on certain foreign sourced earnings. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of Tax Reform. As a result of changes under Tax Reform, we have recognized a provisional amount of $71.0 million of additional tax expense in our consolidated financial statements for the year ended December 31, 2017. The additional tax expense is primarily due to the revaluing of our ending net deferred tax assets at December 31, 2017 because of the reduction in the U.S. corporate income tax rate under Tax Reform. While we have substantially completed our provisional analysis of the income tax effects of Tax Reform, and recorded a reasonable estimate of such effects, the ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, further refinement of our calculations, additional analysis, changes in assumptions, and actions we may take as a result of Tax Reform.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)11. Income Taxes (Continued) While Tax Reform provides for a modified territorial tax system beginning in 2018, it also includes a new U.S. tax base erosion provision, the tax on global intangible low-taxed income (GILTI). Beginning in 2018, the GILTI provision of Tax Reform will require us to include in our U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets in our U.S. income tax return beginning in 2018. We have elected to account for the GILTI tax in the period in which it is incurred, and do not expect any significant impacts from this tax. We previously asserted that all undistributed earnings of foreign subsidiaries are permanently reinvested, and we have therefore not provided for U.S. deferred taxes on unremitted earnings. As required by Tax Reform, we are subject to a one-time transition tax of $1.8 million on our unremitted foreign earnings. After payment of the transition tax, our foreign earnings will have been taxed by the United States, and we do not anticipate any other material taxes on our undistributed earnings of foreign subsidiaries upon a future repatriation. Due to this change in facts, we conclude that our undistributed foreign earnings are no longer permanently reinvested. (benefit) consist of the following (in millions): Year Ended December 31, 2022 2021 2020 Current: Federal $ 228.3 $ 112.3 $ 114.6 State 45.8 24.6 20.0 Total current 274.1 136.9 134.6 Deferred Federal (44.8) (10.1) 1.6 State (6.0) (8.7) (12.1) Total deferred (50.8) (18.8) (10.5) Total income tax expense $ 223.3 $ 118.1 $ 124.1 Year Ended December 31, 2017 2016 2015 $ 261.3 $ 311.9 $ 351.2 23.9 24.1 37.0 285.2 336.0 388.2 67.2 8.3 (2.7 ) (0.8 ) 2.2 7.3 66.4 10.5 4.6 $ 351.6 $ 346.5 $ 392.8 Year Ended December 31, 2022 2021 2020 Federal taxes at the statutory rate $ 199.6 $ 124.7 $ 134.2 State taxes, net of federal benefit 28.4 14.6 7.0 General business credits (18.0) (11.5) (24.0) Excess tax benefits from share-based compensation (15.1) (3.6) (1.4) Uncertain tax positions 11.8 (1.0) 4.8 Nondeductible compensation 9.2 11.8 11.5 Change in valuation allowance 10.9 (18.7) (3.1) Other (3.5) 1.8 (4.9) Total income tax expense $ 223.3 $ 118.1 $ 124.1 Effective tax rate 23 % 20 % 19 % Year Ended December 31, 2017 2016 2015 $ 269.2 $ 371.1 $ 365.5 71.0 — — (22.8 ) (22.0 ) (21.8 ) 19.0 — — 17.5 1.1 — (15.1 ) (10.5 ) (6.9 ) 14.2 17.1 28.7 (4.5 ) — — 1.8 (11.4 ) 29.3 1.3 1.1 (2.0 ) $ 351.6 $ 346.5 $ 392.8 UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)11. Income Taxes (Continued)
Components of the net deferred tax assets are as follows (in millions): As of December 31, 2022 2021 Deferred tax assets: Intangible assets $ 168.2 $ 186.1 Capitalized research and development 90.3 — Share-based compensation 64.2 73.4 Basis differences in investments 25.0 1.4 Reserves and accrued liabilities 20.7 18.3 SERP 9.9 10.9 NOLs 9.5 8.3 Other 3.3 5.0 Total deferred tax assets 391.1 303.4 Less: Valuation allowance (22.4) (11.5) Total net deferred tax assets 368.7 291.9 Deferred tax liabilities: Plant and equipment principally due to differences in depreciation (37.4) (28.2) Other (3.6) (1.8) Total deferred tax liabilities (41.0) (30.0) Total deferred tax assets, net $ 327.7 $ 261.9 As of
December 31, 2017 2016 $ 24.6 $ 48.1 34.3 44.7 12.6 18.9 47.7 80.1 11.6 — 18.6 22.9 149.4 214.7 (13.6 ) (23.5 ) (5.5 ) (8.2 ) 130.3 183.0 (16.9 ) (4.7 ) $ 113.4 $ 178.3 F-27 United Therapeutics, a public benefit corporation Unrecognized tax benefits as20172022, we had gross federal, foreign, and 2016, were $0.5state net operating loss carryforwards of zero, $6.8 million, and included $0.3$140.0 million, of tax benefits that, if recognized, would impact our effective tax rate. We record interest and penalties related to uncertain tax positions as a component of income tax expense.respectively, which either expire at various dates beginning in 2030 or have no expiration date. As of both December 31, 2017 and 2016,2022, we had state research credit carryforwards of $1.2 million. We expect that a significant amount of these carryforwards will expire unused, so we have not accrued any interest expense relating to uncertainestablished valuation allowances for the related deferred tax positions. It is reasonably possible that this position will be effectively settled during the next twelve months, at which time some or all of the benefit may be recognized. We are unaware of any additional positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.substantially all other major jurisdictions for tax years prior to 2011. At2014.2017,2022 and 2021, we had a gross federal net operating loss carryforward of $1.0$15.1 million which is fully reserved with a valuation allowance. We had approximately $54.3and $3.6 million of unrecognized tax benefits, excluding interest and penalties, that would impact our effective tax rate if recognized. The total amount of unrecognized tax benefits relating to our tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Given the uncertainty of these future events, it is reasonably possible that the balance of unrecognized tax benefits could change significantly over the next 12 months. However, due to the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross state net operating loss carryforwards which will expire at various dates betweenunrecognized tax benefits.2029ended December 31, 2022, 2021, and 2037. 2020 (in millions): Year Ended December 31, 2022 2021 2020 Unrecognized tax benefits, beginning of the period $ 3.6 $ 4.5 $ — Gross decreases related to prior period tax positions — (0.1) — Gross increases related to prior period tax positions 10.3 — 3.8 Gross increases related to current period tax positions 1.3 0.7 0.7 Gross decreases as a result of settlements during the current period — (1.5) — Unrecognized tax benefits, end of the period $ 15.2 $ 3.6 $ 4.5 expect that these carryforwards will expire unused, sorecord interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2022 and 2021, our liability for unrecognized tax benefits included approximately $0.7 million and $0.3 million, respectively, for the relatedaccrual of interest and penalties. As of December 31, 2022, 2021, and 2020, we recorded approximately a $0.4 million expense, $0.1 million benefit, and $0.3 million expense, respectively, for the accrual of interest and penalties in our consolidated statement of operations.asset has been reserved withassets as of December 31, 2022.full valuation allowance.Table15% corporate minimum tax and adjusted certain energy-related tax credits and incentives. We currently do not expect the tax-related provisions of ContentsUNITED THERAPEUTICS CORPORATIONNotesthe IRA to Consolidated Financial Statements (Continued)12.have a material impact on our consolidated financial statements, including our effective tax rate.(SERP)(SERP) to provide retirement benefits to certain senior members of our management team.sixthsixth month after retirement. Participants who elect to receive monthly payments will continue to receive payments through the remainder of their life. Alternatively, participants who elect to receive a lump sum distribution will receive a payment equal to the present value of the estimated monthly payments that would have been received upon retirement. As of December 31, 20172022 and 2016,2021, all SERP participants had elected to receive a lump sum distribution. Participants who terminate employment for any reason other than death, disability, or change in control prior to age 60 will not be entitled to receive any benefits under the SERP. We recognize the unfunded balance of the SERP as a liability on our consolidated balance sheets. Sincethewe recognize a liability is equal to the projected benefit obligation as measured at the end of each fiscal year. Expenses related to the SERP are reported under the captions, "Research and development" and "Selling, general and administrative" within "Operating expenses" on the consolidated statements of operations.2022 Annual Report F-28 Year Ended
December 31, 2017 2016 $ 49.5 $ 54.8 2.2 2.7 1.6 1.5 — 2.0 2.6 (11.5 ) $ 55.9 $ 49.5 — — $ 55.9 $ 49.5 $ 16.4 $ 15.2 Year Ended December 31, 2022 2021 Projected benefit obligation at the beginning of the year $ 67.1 $ 68.6 Service cost 3.1 3.4 Interest cost 1.2 0.9 Benefits paid (0.2) — Net actuarial gain (19.7) (5.8) Projected benefit obligation at the end of the year $ 51.5 $ 67.1 $ 19.5 $ 18.2 Amount included in Other non-current liabilities $ 32.0 $ 48.9 UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)12. Employee Benefit Plans (Continued) The accumulated benefit obligation, a measure that does not consider future increases in participants' salaries, was $44.8 million and $37.5 million at December 31, 2017 and 2016, respectively. Future estimated benefit payments, based on current assumptions, including election of lump-sum distributions and expected future service, are as follows (in millions): $ 16.4 5.8 — — — 71.0 $ 93.2 weighted-averageweighted average assumptions were used to measure the SERP obligation:Year Ended December 31, 2022 2021 Discount rate 4.95 % 2.05 % Salary increases 4.00 % 4.00 % Lump-sum interest rate 5.00 % 2.75 % Year Ended
December 31, 2017 2016 3.36 % 3.67 % 4.00 % 4.00 % onin our consolidated statements of operations consisted of the following (in millions):Year Ended December 31, 2022 2021 2020 Service cost $ 3.1 $ 3.4 $ 2.8 Interest cost 1.2 0.9 1.3 Amortization of prior service cost 0.7 0.7 1.3 Total $ 5.0 $ 5.0 $ 5.4 Year Ended
December 31, 2017 2016 2015 $ 2.2 $ 2.7 $ 3.5 1.6 1.5 1.8 1.5 1.4 1.2 (0.6 ) (0.4 ) 0.2 $ 4.7 $ 5.2 $ 6.7 UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)12. Employee Benefit Plans (Continued) Reclassification adjustments related toThe service cost component is reported within operating expenses and the SERP from accumulated other comprehensive loss to thecomponents are reported in other (expense) income, net in our consolidated statements of operations by line item and the tax impact of these reclassifications is presented below (in millions):
Comprehensive Loss(1) As of
December 31, 2017 As of
December 31, 2016 $ 0.2 $ 0.3 1.3 1.1 1.5 1.4 (0.1 ) (0.1 ) (0.5 ) (0.3 ) (0.6 ) (0.4 ) 0.9 1.0 (0.3 ) (0.4 ) $ 0.6 $ 0.6 relatingrelated to the SERP that have been recognized in other comprehensive (loss) income are as follows (in millions):Year Ended December 31, 2022 2021 2020 Net actuarial gain (loss) $ 19.7 $ 5.8 $ (8.4) Prior service cost 0.7 0.7 1.3 Total recognized in other comprehensive (loss) income 20.4 6.5 (7.1) Tax (expense) benefit (1.1) (0.3) 0.4 Total, net of tax $ 19.3 $ 6.2 $ (6.7) Year Ended
December 31, 2017 2016 2015 $ (3.2 ) $ 11.0 $ 1.6 1.5 (0.6 ) 1.2 (1.7 ) 10.4 2.8 0.6 (3.8 ) (1.2 ) $ (1.1 ) $ 6.6 $ 1.6 F-29 United Therapeutics, a public benefit corporation UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)12. Employee Benefit Plans (Continued)relatingrelated to the SERP included in accumulated other comprehensive loss that have not yet been recognized as a component of net periodic pension cost onin our consolidated statements of operations (in millions):Year Ended December 31, 2022 2021 2020 Net actuarial (gain) loss $ (21.7) $ (2.0) $ 3.8 Prior service cost 0.6 1.3 2.0 Total included in accumulated other comprehensive loss (21.1) (0.7) 5.8 Tax expense 2.3 1.2 0.9 Total, net of tax $ (18.8) $ 0.5 $ 6.7 Year Ended
December 31, 2017 2016 2015 $ (6.6 ) $ (9.8 ) $ 1.2 6.2 7.7 7.1 (0.4 ) (2.1 ) 8.3 0.2 0.8 (3.0 ) $ (0.2 ) $ (1.3 ) $ 5.3 Estimated amounts includedThe accumulated benefit obligation, a measure that does not consider future increases in accumulated other comprehensive lossparticipants’ salaries, was $47.0 million and $59.1 million as of December 31, 2017, that2022 and 2021, respectively.expected to be recognized as components of net periodic pension cost on our consolidated statements of operations for the year ended December 31, 2018, comprise the followingfollows (in millions):Year Ended December 31, 2023 $ 19.5 2024 12.8 2025 5.3 2026 — 2027 — Thereafter 30.1 Total $ 67.7 $ 1.5 (0.1 ) $ 1.4 participant'sparticipant’s elected salary deferral. Matching contributions vest immediately for participants who have been employed for three years;three-years; otherwise, matching contributions vest annually, in one-third increments over a three-year period until the three-year employment requirement has been met.13.Operating 2023.2032. Certain lease arrangements include renewal options and escalation clauses. In addition, various lease agreements to which we are party require that we comply with certain customary covenants throughout the term of these leases. If we are unable to comply with these covenants and cannot reach a satisfactory resolution in the event of noncompliance, these agreements could terminate.UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)13. Commitments and Contingencies (Continued)2017,2022, are as follows (in millions):Year Ending December 31, 2023 $ 3.9 2024 3.5 2025 3.5 2026 3.5 2027 3.6 Thereafter 13.7 Total $ 31.7 $ 3.4 0.9 0.7 0.6 0.7 0.4 $ 6.7 rentoperating lease expense was $4.8 million, $4.4$3.6 million, and $3.8$3.5 million for the years ended December 31, 2017, 20162022, 2021, and 2015,2020, respectively.2022 Annual Report F-30 as described in theAssignment and License Agreements section below and acquisition agreements.pursuant to which we have in-licensed or acquired intellectual property rights covering our commercial and/or development-stage products. Generally, these agreements require that we make milestone payments in cash upon the achievement of certain product development and commercialization goals and payments of royalties upon commercial sales.Assignment and License AgreementsSupernus Pharmaceuticals, Inc. In 2006, we entered into an exclusive license agreement with Supernus Pharmaceuticals, Inc. (Supernus) for the use The following table outlines our financial obligations under certain of certain technologies developed by Supernus in our Orenitram tablet. Under this agreement, we paid Supernus certain amounts upon the achievement of specified milestones based on the development and commercial launch of Orenitram for PAH, and we would be obligated to make additional milestone payments if we develop Orenitram for a second indication. Additionally, we pay a single digit royalty under this agreement, based on net product sales of Orenitram. Royalties will be paid for approximately twelve years commencing with the first commercial sale, which occurred in the second quarter of 2014.Eli Lilly and Company In 2008, we acquired from Lilly exclusive rights to develop, market, promote and commercialize Adcirca for the treatment of pulmonary hypertension in the United States. In exchange for these license rights, we agreed to pay Lilly, among other fees, royalties of five percent of our net product sales of Adcirca as a pass through of Lilly's third-party royalty obligations for as long as Lilly is required to make such royalty payments. Pursuant to the terms of our license arrangement, Lilly manufactures Adcirca for us and distributes Adcirca via its wholesaler network in the same manner that it distributes its own pharmaceutical products. We purchase Adcirca from Lilly at a fixed manufacturing cost, which is adjusted by Lilly from time to time. In addition, at Lilly's discretion the license agreement may be terminated in the event that we undergo a change in control.Counterparty Relevant Product Our Financial Obligation Supernus Pharmaceuticals, Inc. Orenitram Single-digit royalty on net product sales of Orenitram, through the fourth quarter of 2026 Lilly Adcirca Ten percent royalty on net sales, plus milestone payments of $325,000 for each $1,000,000 in net product sales The Scripps Research Institute Unituxin One percent royalty on net product sales of Unituxin DEKA Research & Development Corp. Remunity Pump Product fees and single-digit royalty on net product sales of the Remunity Pump and on net sales of Remodulin for use with the system; reimbursement of DEKA’s development and manufacturing costs MannKind Corporation Tyvaso DPI Low double-digit royalty on net product sales of Tyvaso DPI and up to $50.0 million in developmental milestone payments (all of which have already been paid) Arena (now owned by Pfizer) Ralinepag Low double-digit, tiered royalty on net product sales of ralinepag (any route of administration); a one-time payment of $250.0 million upon FDA approval of an inhaled formulation of ralinepag to treat PAH; and a one-time payment of $150.0 million upon approval in certain non-U.S. jurisdictions of an oral version of ralinepag to treat any indication UNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued) Commitments and Contingencies (Continued) In May 2017, we amended our license agreement with Lilly relating to Adcirca, in order to clarify and extend the term of the agreement and to amend the economic terms of the agreement following a patent expiry in November 2017. As a result of this amendment, beginning December 1, 2017, our royalty rate on net product sales of Adcirca increased from five percent to ten percent and we are required to make milestone payments to Lilly equal to $325,000 for each $1,000,000 in net product sales. As amended, the term of the agreement expires on the latest to occur of (1) expiration, lapse, cancellation, abandonment or invalidation of the last claim to expire within a Lilly patent covering the commercialization of Adcirca for the treatment of pulmonary hypertension in the United States; (2) expiration of any government-conferred exclusivity rights to use Adcirca for the treatment of pulmonary hypertension in the United States; or (3) December 31, 2020.The Scripps Research Institute Under a non-exclusive license agreement with The Scripps Research Institute, we pay a royalty of one percent of Unituxin's net sales.Toray Industries, Inc. In 2000, we entered into a license agreement with Toray to obtain exclusive rights to develop and market beraprost, a chemically stable oral prostacyclin analogue, in a sustained release formulation in the United States and Canada for the treatment of all cardiovascular indications. In 2007, we amended the agreement to expand our rights to commercialize modified release formulations of beraprost, which include esuberaprost. As part of the 2007 amendment, we issued 200,000 shares of our common stock (which have since split into 400,000 shares) to Toray with certain put rights. These put rights provide Toray the ability to request at its discretion that we repurchase these shares at a price of $27.21 per share upon 30 days' prior written notice. Accordingly, we classified the value of the shares within temporary equity on our consolidated balance sheets. In the event that Toray requests that we repurchase these shares, we will reclassify the repurchase value of the stock as a liability until settlement. The 2007 amendment also provided for certain milestone payments during the development period and upon receipt of regulatory approval in the United States or the European Union. In 2011, we amended our license agreement with Toray. The amendment did not materially change the terms of our license agreement, except for a reduction in royalty rates in exchange for a total of $50.0 million in equal, non-refundable payments to Toray over the five-year period ending in 2015. As of December 31, 2015, we have fulfilled this obligation to Toray. In March 2017, we amended our license agreement with Toray to further reduce the royalty rate to single digits in exchange for contingent milestone payments in the event that we do not achieve certain clinical and regulatory events by certain dates.Medtronic Inc. In 2009, we entered into an agreement with Medtronic, Inc. (Medtronic) providing us exclusive rights in the United States and certain other countries to develop Medtronic's proprietary intravascular infusion catheter to be used with its SynchroMed® II implantable infusion pump and related infusion system components (together referred to as the Implantable System for Remodulin) in order to deliver Remodulin for the treatment of PAH. If this development program is successful, our agreement provides that, upon commercialization, we will purchase infusion pumps and supplies from MedtronicUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)13. Commitments and Contingencies (Continued)and will also pay a ten percent royalty to Medtronic based on net product sales of Remodulin for use in the Implantable System for Remodulin within the exclusive territories, subject to certain adjustments specified in the agreement. The Implantable System for Remodulin will be exclusive to Remodulin so long as we purchase a minimum percentage of our annual requirement for implantable pump systems from Medtronic. We will be solely responsible for all marketing and promotion of the Implantable System for Remodulin for the treatment of PAH in the exclusive territories.DEKA Research & Development Corp. In 2014, we entered into an exclusive agreement with DEKA Research & Development Corp. (DEKA) to develop a pre-filled, semi-disposable system for subcutaneous delivery of Remodulin. Under the terms of the agreement, we will fund the development costs related to the semi-disposable system and will pay product fees and a single-digit royalty to DEKA based on commercial sales of the system and the Remodulin sold for use with the system.Other We are party to various other license agreements relating to therapies under development. These license agreements require us to make payments based on a percentage of sales, if we are successful in commercially developing these therapies, and may require other payments upon the achievement of certain milestones.14. Segment Information currently operate as one operating segment with a focus on the development and commercialization of products to address the unmet needs of patients with chronic and life-threatening conditions. Our Chief Executive Officer, as our chief operating decision maker, manages and allocates resources to the operations of our company on a consolidated basis. This enables our Chief Executive Officer to assess theour overall level of available resources available and determine how best to best deploy these resources across functions, therapeutic areas, and research and development projects that are in line with our long-term company-wide strategic goals.F-31 United Therapeutics, a public benefit corporation product sales, and gross profit for each of our commercial products and other were as follows (in millions): Remodulin Tyvaso Adcirca Orenitram Unituxin Total $ 670.9 $ 372.9 $ 419.7 $ 185.8 $ 76.0 $ 1,725.3 15.9 18.5 43.1 15.3 12.9 105.7 $ 655.0 $ 354.4 $ 376.6 $ 170.5 $ 63.1 $ 1,619.6 $ 602.3 $ 404.6 $ 372.2 $ 157.2 $ 62.5 $ 1,598.8 10.5 19.6 21.4 13.7 7.5 72.7 $ 591.8 $ 385.0 $ 350.8 $ 143.5 $ 55.0 $ 1,526.1 $ 572.8 $ 470.1 $ 278.8 $ 118.4 $ 20.5 $ 1,460.6 12.4 23.9 16.5 12.5 3.7 69.0 $ 560.4 $ 446.2 $ 262.3 $ 105.9 $ 16.8 $ 1,391.6 Year Ended December 31, 2022 Orenitram Unituxin Adcirca Other Total Total revenues $ 873.0 $ 500.2 $ 325.1 $ 182.9 $ 41.3 $ 13.8 $ 1,936.3 Cost of sales 53.5 34.0 22.4 13.1 17.8 10.8 151.6 Gross profit $ 819.5 $ 466.2 $ 302.7 $ 169.8 $ 23.5 $ 3.0 $ 1,784.7 Year Ended December 31, 2021 Total revenues $ 607.5 $ 513.7 $ 306.1 $ 202.3 $ 55.9 $ — $ 1,685.5 Cost of sales 26.8 37.9 19.7 14.2 23.9 — 122.5 Gross profit $ 580.7 $ 475.8 $ 286.4 $ 188.1 $ 32.0 $ — $ 1,563.0 Unituxin duringinfusion devices, such as the third quarter of 2015.Remunity Pump. 2017 2016 2015 $ 1,536.8 $ 1,461.9 $ 1,353.0 188.5 136.9 112.8 $ 1,725.3 $ 1,598.8 $ 1,465.8 Year Ended December 31, 2022 2021 2020 United States $ 1,814.1 $ 1,564.2 $ 1,412.1 Rest-of-World 122.2 121.3 71.2 Total $ 1,936.3 $ 1,685.5 $ 1,483.3 two specialty pharmaceuticalthree distributors comprising 46 percent and 15in the United States that exceeded ten percent of total revenues in 2017, 50 percent and 14 percentrevenues. Revenue from these three distributors as a percentage of total revenues in 2016, and 55 percent and 16 percent of total revenues in 2015, respectively. All of our revenues for Adcirca are distributed through Lilly's pharmaceutical wholesaler network.Year Ended December 31, 2022 2021 2020 Distributor 1 51 % 50 % 55 % Distributor 2 32 % 29 % 28 % Distributor 3 9 % 11 % 8 % (property, plantincluding PP&E and equipment)right-of-use assets, located by geographic area are as follows (in millions):Year Ended December 31, 2022 2021 2020 United States $ 871.1 $ 768.1 $ 717.3 Rest-of-World 12.6 12.8 14.3 Total $ 883.7 $ 780.9 $ 731.6 2017 2016 2015 $ 544.5 $ 481.1 $ 481.2 1.2 8.2 14.6 $ 545.7 $ 489.3 $ 495.8 2022 Annual Report F-32 TableContentsUNITED THERAPEUTICS CORPORATIONNotescontract claim. As a result, all antitrust claims, all claims under state competition laws, and the common law tortious interference claim have been resolved in our favor. These were the only claims in the case that gave rise to Consolidated Financial Statements (Continued)15. Quarterly Financial Information (Unaudited) Summarized quarterly financial informationany potential for eachtrebling of damages, punitive damages, and/or the award of attorneys’ fees. The court also denied plaintiffs’ request for injunctive relief.years ended December 31,damages trial and any potential appeals, including potential damages amounts sought, the strength of our defenses, the variety of potential legal and factual determinations yet to be made by the court, the rulings that may be subject to appeal, and the inherent unpredictability of any outcome associated with these issues.2016 are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations publication, also known as follows (in millions, except per share amounts): Quarter Ended December 31,
2017 September 30,
2017 June 30,
2017 March 31,
2017 $ 464.7 $ 445.5 $ 444.6 $ 370.5 53.0 19.5 18.9 14.3 411.7 426.0 425.7 356.2 19.0 276.3 (56.0 ) 178.6 $ 0.44 $ 6.37 $ (1.25 ) $ 4.01 $ 0.43 $ 6.27 $ (1.25 ) $ 3.89 Quarter Ended December 31,
2016 September 30,
2016 June 30,
2016 March 31,
2016 $ 409.0 $ 408.2 $ 412.6 $ 369.0 28.4 23.6 20.0 0.7 380.6 384.6 392.6 368.3 110.3 161.8 206.1 235.5 $ 2.61 $ 3.75 $ 4.65 $ 5.19 $ 2.43 $ 3.50 $ 4.39 $ 4.84 16. LitigationWatson Laboratories, Inc.June 2015,April 2020, we received a Paragraph IV certification notice letterCertification Notice Letter (Notice Letter) from Watson Laboratories, Inc. (Watson) indicating that Watson has submitted an abbreviated new drug application (ANDA) to the FDA to market a generic version of Tyvaso. In its notice letter, Watson statesLiquidia, stating that it intends to market a generic version of TyvasoYutrepia before the expiration of U.S. Patent Nos. 6,521,212 and 6,756,033, each of which expiresall patents listed in November 2018; and U.S. Patent No. 8,497,393, which expires in December 2028. Watson's notice letterthe Orange Book for Tyvaso. The Notice Letter states that the ANDALiquidia’s NDA for Yutrepia contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use, or sale of the proposed product described in Watson's ANDA submission. We responded to the Watson notice letter by filingYutrepia. in July 2015 against Watson in the U.S. District Court for the District of New Jersey allegingDelaware against Liquidia for infringement of U.S. Patent Nos. 6,521,212, 6,756,033,the ’901 patent and 8,497,393. Under theTable ’066 patent, both of ContentsUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)16. Litigation (Continued)is automaticallywas precluded by regulation from approving Watson's ANDALiquidia’s NDA for up to 30 months from receipt of Watson's notice letter or until the issuanceresolution of a U.S. District Court decision that is adverse to us,the litigation, whichever occurs first. In September 2015, WatsonJuly 2020, Liquidia filed (1) a motion to dismiss some, but not all, counts of the complaint; (2) itsan answer to our complaint; and (3) certaincomplaint that included counterclaims against us. The District Court granted Watson's motion to dismiss certain counts of our complaint. In September 2015, we filed our answer to Watson's counterclaims. In June 2016, Watson sent us a second Paragraph IV certification notice letter addressing two newalleging, among other things, that the patents U.S. Patent Nos. 9,339,507 (the '507 patent) and 9,358,240 (the '240 patent), which expire in March and May 2028, respectively. In June 2016, we filed an amended complaint against Watson asserting these two additional patents. In June 2017, Watson filed petitions with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office forinter partes review (IPR), seeking to invalidate the '507 patent and '240 patent. On January 11, 2018, the PTAB issued decisions to institute IPR proceedings with respect to both patents. Trialat issue in the District Court on all of the asserted patents was scheduled to take place in September 2017. The parties, however, asked the District Court to stay the case until 14 days after the PTAB resolves Watson's IPR petitions either by declining to institute the IPRs or by issuing a final written decision on the merits. The District Court granted the request staying the case, and as such trial will not occur until sometime after the stay is lifted. The stay will not be lifted until there is a final written decision by the PTAB, which we would expect within a year of the IPR(s) being instituted. We intend to vigorously enforce our intellectual property rights relating to Tyvaso.Actavis Laboratories FL, Inc. In February 2016, we received a Paragraph IV certification notice letter (the First Actavis Notice Letter) from Actavis Laboratories FL, Inc. (Actavis) indicating that Actavis has submitted an ANDA to the FDA to market a generic version of the 2.5 mg strength of Orenitram. The First Actavis Notice Letter states that Actavis intends to market a generic version of the 2.5 mg strength of Orenitram before the expiration of the following patents, all of which are listed in the Orange Book:U.S. Patent No.Expiration Date8,252,839May 20249,050,311May 20247,544,713July 20247,417,070July 20268,497,393December 20288,747,897October 20298,410,169February 20308,349,892January 2031 The First Actavis Notice Letter states that the ANDA contains a Paragraph IV certification alleging that these patentslitigation are not valid not enforceable, and/orand will not be infringed by the commercial manufacture, use, or sale of Yutrepia.F-33 United Therapeutics, a public benefit corporation describedprior to May 2027 in Actavis' ANDA submission. We respondedtwo circumstances: (1) Liquidia could prevail on appeal, either from the district court judgment or IPRs, such that it is not found to infringe any valid claims of our patents; or (2) the First Actavis Notice Letter by filingdistrict court or appeals court could stay the order barring FDA approval during the pendency of its appeals.lawsuit (the First Actavis Action) against Actavismotion in March 2016the patent case in the U.S. District Court for the District of New Jersey alleging infringement of each of the patents noted above and one additional patent, U.S. Patent No. 9,278,901 (the '901 patent),UNITED THERAPEUTICS CORPORATIONNotesDelaware to Consolidated Financial Statements (Continued)16. Litigation (Continued)which expires in May 2024 and is also now listed in the Orange Book. Under the Hatch-Waxman Act, the FDA is automatically precluded from approving Actavis' ANDA with respect to the 2.5 mg strength of Orenitram for up to 30 months from receipt of Actavis' notice letter or until the issuance of a U.S. District Court decision that is adverse to us with respect to all of the eight patents listed in the table above, whichever occurs first. In June 2016, we filedfile an amended complaint adding trade secret misappropriation claims against Actavis, Actavis filed its answerLiquidia and counterclaims toa former Liquidia employee, Dr. Robert Roscigno. The court denied the motion based on a finding that amended complaint, andadding the additional claims would impact the case schedule. Thus, we filed those claims as a separate case against Liquidia and Robert Roscigno in North Carolina state court. Discovery is underway in that case.answerintellectual property rights related to those counterclaims. In May 2016, we receivedTyvaso and Tyvaso DPI.second Paragraph IV certification notice letter from Actavis (the Second Actavis Notice Letter) indicating that Actavis has amended its ANDA to include its generic versiondesignated series of the 0.25 mgMAO-MSO Recovery II, LLC filed a “Class Action Complaint” against Caring Voices Coalition, Inc. (CVC) and 1.0 mg strengths of Orenitram, in addition to the 2.5 mg strength identified in the First Actavis Notice Letter. We responded to the Second Actavis Notice Letter by filing an additional lawsuit against Actavis (the Second Actavis Action) in June 2016us in the U.S. District Court for the District of New Jersey alleging infringementMassachusetts. The complaint alleged that we violated the federal Racketeer Influenced and Corrupt Organizations (RICO) act and various state laws by coordinating with CVC when making donations to a PAH fund so that those donations would go towards copayment obligations for Medicare patients taking drugs manufactured and marketed by us. Plaintiffs claim to have received assignments from various Medicare Advantage health plans and other insurance entities that allow them to bring this lawsuit on behalf of those entities to recover allegedly inflated amounts they paid for our drugs. In April 2021, the same patents asserted incourt granted our motion to transfer the First Actavis Action. The Second Actavis Action triggered an additional 30-month stay with respectcase to the 0.25 mg and 1.0 mg strengths. Specifically, the FDA is automatically precluded from approving Actavis' ANDA with respect to the 0.25 mg and 1.0 mg strengths of Orenitram for up to 30 months from receipt of the Second Actavis Notice Letter or until the issuance of a U.S. District Court decisionfor the Southern District of Florida.is adversesame day, plaintiffs filed an amended complaint that includes state antitrust claims based on alleged facts similar to us with respectthose raised by Sandoz and RareGen in the matter described above. The amended complaint added MSP Recovery Claims Series 44, LLC as a plaintiff and Smiths Medical and CVC as defendants. As a result of the amended complaint, the court ruled that our motion for judgment on the pleadings was moot. In December 2021, we filed a motion to dismiss all of the nine patents noted above, whichever occurs first.Actavis in September 2016, alleging infringement of two patents that were not issuedthis lawsuit.listedUnited HealthcareOrange BookU.S. District Court for the District of Maryland on December 13, 2022 and November 14, 2022, respectively. Each of these lawsuits includes allegations similar to those in the MSP Recovery matter discussed above concerning our charitable contributions to CVC. In particular, these lawsuits allege that our donations to a charitable organization that assisted patients with affording PAH treatments violated RICO and various state laws. Our deadline to respond to the lawsuits is March 3, 2023.2022 Annual Report F-34 timediversion of 340B-purchased drugs to individuals who are not patients of the First340B covered entity, and Second Actavis Notice Letters, butto prohibited “duplicate discounts” when 340B-purchased drugs are now listed:also billed to Medicaid. In November 2020, we notified the U.S. Patent Nos. 9,393,203, which expires in April 2026,Health Resources and 9,422,223, which expires in May 2024. On February 15, 2018,Services Administration (entered into a Settlement Agreementwould begin implementing narrowly-tailored 340B contract pharmacy policies with Actavis to settle all ongoing litigation between the parties concerning Actavis' ANDA for a generic versiongoal of Orenitram. Under the Settlement Agreement, we granted Actavis a non-exclusive license to manufacture and commercialize in the United States the generic version of Orenitram described in Actavis' ANDA filing beginning on June 15, 2027, although Actavis may be permitted to enter the market earlier under certain circumstances. The Settlement Agreement does not grant Actavis a license to manufacture a generic version of any other product, such as Tyvaso or Remodulin. The Settlement Agreement does not grant Actavis any rights other than those required to launch Actavis' generic version of Orenitram. The termsstemming abuses of the settlement agreement are substantially similar to340B program without upsetting the termsstatus quo or creating hardship for covered entities or their patients. At around the same time, a number of our settlement agreement with Sandoz and other generic companies relating to Remodulin.accordance with the terms of the Settlement Agreement, the parties have submitted the Settlement Agreement to the U.S. Federal Trade Commission andDecember 2020, the U.S. Department of JusticeHealth and Human Services (HHS) General Counsel issued a non-binding Advisory Opinion (the Advisory Opinion) concluding that, among other things, pharmaceutical manufacturers are obligated to sell their drugs at the 340B discounted price to an unlimited number of 340B contract pharmacies. In May 2021, HRSA sent a letter to us stating that our 340B contract pharmacy policies violated the 340B statute. HRSA also sent materially similar letters to five other pharmaceutical manufacturers. We responded to that letter by clarifying our policies and requesting additional information from HRSA. To date, HRSA has not responded.review. The parties are also taking certain procedural stepsthe District of Columbia seeking to dismissvindicate the First Actavis Action and Second Actavis Action with prejudice.SteadyMed Ltd. In October 2015, SteadyMed Ltd. (SteadyMed) filed an IPR petitionlawfulness of our 340B program contract pharmacy policies. Despite the litigation, in September 2021, HRSA sent to us, along with the PTAB seekingother manufacturers challenging HRSA’s 340B interpretation, letters stating that HRSA is referring “this issue to invalidate U.S. Patent No. 8,497,393 (the '393 Patent), which expiresthe HHS Office of the Inspector General (December 2028a related case involving Novartis, in October 2021. In November 2021, the court granted our motion for summary judgment in part, and coversissued a methoddecision holding that the HRSA letters threatening enforcement action “contain legal reasoning that rests upon an erroneous reading of making treprostinil,Section 340B.” The court explained that “[t]he statute’s plain language, purpose, and structure do not prohibit drug manufacturers from attaching any conditions to the active pharmaceutical ingredient in Remodulin, Tyvaso and Orenitram. The '393 Patent was also the subjectsales of now-settled litigation with generic companies relating to ANDAs to market generic versions of Remodulin, and remains the subject of our pendingUNITED THERAPEUTICS CORPORATIONNotes to Consolidated Financial Statements (Continued)16. Litigation (Continued)litigation with Watson, described above. In June 2017, SteadyMed submittedcovered drugs through contract pharmacies. Nor do they drug application (NDA) tostatutory provision, a new legislative rule, or a well-developed legal theory that Section 340B precludes the FDA seeking approval of a product called Trevyent®, which is a single-use, pre-filled pump intended to deliver a two-day supply of treprostinil subcutaneously using SteadyMed's PatchPump® technology. In August 2017, SteadyMed announced receipt of a refuse-to-file letter from the FDA relating to SteadyMed's NDA, requesting further information on certain device specificationsspecific conditions at issue here.”requiring performance testing as well as additional design verification and validation testing on the final, to-be-marketed Trevyent product. In March 2017, the PTAB issued a Final Written Decision regarding SteadyMed's IPR, finding that all claims of the '393 patent are not patentable. In May 2017, weHSS appealed the PTAB's decision to the U.S. Court of Appeals for the FederalDistrict of Columbia Circuit in December 2021, and the appeal is pending. Oral argument took place on October 24, 2022, and the parties await the court’s decision.November 2017, the Federal Circuit issued its decision affirming the PTAB. On February 9, 2018, we filed a petition for certiorari seeking reviewparallel with our case, and some of the Federal Circuit decision bydecisions issued in those cases have reached different conclusions regarding HRSA’s and HHS’s interpretation of the United States Supreme Court. The '393 patent remains valid and enforceable until appeals have been exhausted. 340B statute than our case.continue vigorously defending the '393 patent.Department of Justice SubpoenaMay 2016, we received a subpoena from the U.S. Department of Justice (DOJ) requesting documents regarding our support of 501(c)(3) organizations that provide financial assistance to patients. Other companies received similar inquiries as part of a DOJ investigation regarding whether that support may violate the Federal Anti-Kickback Statute and the Federal False Claims Act. On December 19, 2017,2020, we entered into an agreement to acquire a civil Settlement Agreementrare pediatric disease priority review voucher for $105.0 million. In January 2021, we closed the transaction and expensed the $105.0 million within research and development in our consolidated statements of operations for the year ended December 31, 2021. We redeemed the voucher in connection with the DOJ and the Office of Inspector General (OIG)our submission of the Department of Health and Human Services (collectively the "United States Government"). The Settlement Agreement is neither an admission of facts nor liability, nor a concession by the United States Government that its contentions are not well-founded. Under the Settlement Agreement, we paid to the United States Government the sum of approximately $210.0 million. During the second quarter of 2017, we recorded a $210.0 million accrual relating to this matter. In connection with the civil settlement, we also entered into a Corporate Integrity Agreement with the OIG, effective as of December 18, 2017, which requires us to maintain our corporate compliance program and to undertake a set of defined corporate integrity obligationsNDA for a period of five years, endingTyvaso DPI in December 2022.April 2021.F-35 United Therapeutics, a public benefit corporation
Years Ended December 31, 2017, 20162022, 2021, and 2015
2020
(In millions) Valuation Allowance on Deferred Tax Assets Balance at Beginning of Year Additions Charged to Expense Other Additions Deductions Balance at End of Year Year Ended December 31, 2022 $ 11.5 $ 10.9 $ — $ — $ 22.4 $ 35.5 $ 4.4 $ — $ (28.4) $ 11.5 $ 36.6 $ — $ 3.0 $ (4.1) $ 35.5 Inventory Reserves Balance at Beginning of Year Additions Charged to Expense Deductions Balance at End of Year Year Ended December 31, 2022 $ 15.7 $ 11.2 $ (5.3) $ 21.6 Year Ended December 31, 2021 $ 16.8 $ 10.0 $ (11.1) $ 15.7 Year Ended December 31, 2020 $ 20.9 $ 7.7 $ (11.8) $ 16.8 Valuation Allowance on Deferred Tax Assets Balance at
Beginning
of Year Additions
Charged to
Expense Deductions Balance at
End of Year $ 4.7 $ 13.4 $ (1.2 ) $ 16.9 $ 3.4 $ 1.3 $ — $ 4.7 $ 3.0 $ 0.4 $ — $ 3.4 2022 Annual Report F-36 Inventory Reserves Balance at
Beginning
of Year Additions
Charged to
Expense Deductions Balance at
End of Year $ 17.5 $ 12.1 $ (4.5 ) $ 25.1 $ 12.1 $ 8.2 $ (2.8 ) $ 17.5 $ 10.5 $ 7.9 $ (6.3 ) $ 12.1 ITEMCHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEMCONTROLS AND PROCEDURESChairmanChairperson and Chief Executive Officer and Chief Financial Officer and Treasurer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2017.2022. Based on that evaluation, our ChairmanChairperson and Chief Executive Officer and Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures were effective as of December 31, 2017.Management's2022.2017,2022, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control—Integrated Framework (2013). Management'sManagement’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this assessment, our management concluded that, as of December 31, 2017,2022, our internal control over financial reporting was effective."Report“Report of Independent Registered Public Accounting Firm"Firm” and incorporated herein by reference.20172022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.ITEMOTHER INFORMATION58 United Therapeutics, a public benefit corporation ITEMDIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE20182023 annual meeting of shareholders currently scheduled for June 27, 201826, 2023 (the 20182023 Proxy Statement)Statement) is hereby incorporated herein by reference. Information regarding our executive officers appears inItem 1 of this Report under the headingInformation about our Executive Officers of the Registrant. Information regarding theour Audit Committee and theour Audit Committee'sCommittee’s financial expert appearing under the headingCommittees of our Board of Directors—Audit Committee in our 20182023 Proxy Statement is hereby incorporated herein by reference.Beneficial Ownership Reporting ComplianceReports in our 20182023 Proxy Statement is hereby incorporated herein by reference. Principal, Causey Consortiumof theOxford Glycobiology Institute, and Professor Emeritus,Oxford University of Oxford Private Investor Vice-Dean and Engineering, Google Inc. Dean, UCLA Anderson School of Management and John E. Anderson Chair in Management Chairman2022 Annual Report 59 ITEMEXECUTIVE COMPENSATIONSummaryand Executive Compensation Table and Grants of Plan-Based Awards in 2017, Narratives to Summary Compensation Table and Grants of Plan-Based Awards Table, Summary of Terms of Plan-Based Awards, Supplemental Executive Retirement Plan, Rabbi Trust, Potential Payments Upon Termination or Change in Control, and Director CompensationData in our 20182023 Proxy Statement and is incorporated herein by reference.20182023 Proxy Statement and is incorporated herein by reference.ITEMSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS20182023 Proxy Statement and is incorporated herein by reference.2017,2022, regarding our securities authorized for issuance under equity compensation plans: Number of securities
to be issued
upon exercise
of outstanding
options (a)(2) Weighted average
exercise price of
outstanding
options (b)(3) Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a)) (c)(4) 5,901,363 $ 119.61 5,362,968 5,901,363 $ 119.61 5,362,968 Plan category 7,444,885 $ 128.21 5,507,423 4,385 — 73,748 Total 7,449,270 $ 128.21 5,581,171
Information regarding these plans is contained in Note 8—Share-Based Compensation to our consolidated financial statements.weighted-averageweighted average exercise price of the outstanding stock options only. The outstanding RSUs are not included in this calculation because they do not have an exercise price.2,577,6272,540,942, 2,966,481, and 2,785,34173,748 of shares available for future issuance under the ESPP, the 2015 Plan, and ESPP,the 2019 Inducement Plan, respectively. Under the ESPP, employees may purchase shares based upon a 6-monthsix-month offering period at an amount equal to the lesser of (1) 85 percent of the closing market price of the Common Stock on the first day of the offering period,period; or (2) 85 percent of the closing market price of the Common Stock on the last day of the offering period. Refer to Note 98—Share-Based Compensation—Employee Stock Purchase PlanESPP for more information. The number under column (c) assumes that all 841,251 outstanding RSUs included in column (a) vest. Each RSU is only counted as one share in column (a) because only one share is issuable upon vesting. However, if any RSU does not vest, the number of shares available for future issuance will increase by 1.35 and 2.14, under the 2015 Plan and 2019 Inducement Plan, respectively, because of the share counting formula described in note (3) above.60 United Therapeutics, a public benefit corporation ITEMCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCECommittees, Corporate Governance—and Nominees—Director Independence, and Our Corporate Governance—Board Structure—Committees of ourOur Board of Directors in our 20182023 Proxy Statement and is incorporated herein by reference.ITEMPRINCIPAL ACCOUNTING FEES AND SERVICESCommittee'sCommittee’s pre-approval policies and procedures, will appear under the headingReport of the Audit Committee and Information on our Independent AuditorsMatters in our 20182023 Proxy Statement and is incorporated herein by reference.ITEMEXHIBITS, FINANCIAL STATEMENT SCHEDULESfactualfacts or disclosuredisclose any other information about United Therapeutics or the other parties to the agreements. The agreements contain representations and warranties made by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement, and: (1) should not be treated as categorical statements of fact, but rather as a way of allocating risk between the parties; (2) have in some cases been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (3) may apply standards of materiality in a way that is different from what may be material to investors; and (4) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.SEC'sSEC’s website athttp://www.sec.gov.(a)(1) Our financial statements filed as part of this report on Form 10-K are set forth in the Index to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.
(a)(2)
The Schedule II—Valuation and Qualifying Accounts is filed as part of this Form 10-K. All other schedules are omitted because they are not applicable or not required, or because the required information is included in theour consolidated statements or notes thereto.
(a)(3)
Exhibits filed as a part of this Form 10-K are listed on the Exhibit Index, which is incorporated by reference herein.ExhibitNo.DescriptionExhibit No. 3.1Description2.1* 3.1 3.2 3.22022 Annual Report 61 ExhibitNo.Description62 10.23**Second Amendment to the United Therapeutics, Corporation Share Tracking Awards Plan, incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed on February 6, 2012.a public benefit corporation64 10.55United Therapeutics, a public benefit corporationExhibit No. Description 10.56 10.57 10.5621***23.1***31.1***31.2***ExhibitNo.Description32.1***Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-OxleySarbanes‑Oxley Act of 2002.32.2******†The following financial information from our Annual Report on Form 10-K10‑K for the year ended December 31, 2017,2022, filed with the SEC on February 21, 2018,22, 2023, formatted in Inline Extensible Business Reporting Language (XBRL)(iXBRL): (i)(1) our Consolidated Balance Sheets as of December 31, 20172022 and 2016, (ii)2021, (2) our Consolidated Statements of Operations for each of three years in the period ended December 31, 2017, (iii)2022, (3) our Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2017, (iv)2022, (4) our Consolidated Statements of Stockholders'Stockholders’ Equity for each of the three years in the period ended December 31, 2017, (v)2022, (5) our Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2017,2022, and (vi)(6) the Notes to our Consolidated Financial Statements.Cover Page Interactive Data File (embedded within the iXBRL document) Registrant'sRegistrant’s previously filed reports with the Securities and Exchange Commission are filed under File No. 000-26301.000‑26301.2022 Annual Report 65 ITEMFORMForm 10-K SUMMARYUNITED THERAPEUTICS CORPORATION By: /s/ MARTINE ROTHBLATT February 22, 2023 UNITED THERAPEUTICS CORPORATION
66By:/s/ MARTINE A. ROTHBLATTMartine A. Rothblatt, Ph.D.February 21, 2018Chairman and Chief Executive OfficerUnited Therapeutics, a public benefit corporationSignatures Title Date /s/ MARTINE ROTHBLATT Chairperson, Chief Executive Officer and Director
(Principal Executive Officer)February 22, 2023 Martine Rothblatt /s/ JAMES C. EDGEMOND Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)February 22, 2023 James C. Edgemond /s/ CHRISTOPHER CAUSEY Director February 22, 2023 Christopher Causey /s/ RAYMOND DWEK Director February 22, 2023 Raymond Dwek /s/ RICHARD GILTNER Director February 22, 2023 Richard Giltner /s/ KATHERINE KLEIN Director February 22, 2023 Katherine Klein /s/ RAYMOND KURZWEIL Director February 22, 2023 Raymond Kurzweil /s/ LINDA MAXWELL Director February 22, 2023 Linda Maxwell /s/ NILDA MESA Director February 22, 2023 Nilda Mesa /s/ JUDY D. OLIAN Director February 22, 2023 Judy D. Olian /s/ CHRISTOPHER PATUSKY Director February 22, 2023 Christopher Patusky /s/ LOUIS W. SULLIVAN Director February 22, 2023 Louis W. Sullivan /s/ TOMMY G. THOMPSON Director February 22, 2023 Tommy Thompson SignaturesTitleDate/s/ MARTINE A. ROTHBLATTMartine A. Rothblatt2022 Annual ReportChairman and Chief Executive Officer(Principal Executive Officer)February 21, 2018/s/ JAMES C. EDGEMONDJames C. EdgemondChief Financial Officer and Treasurer(Principal Financial Officer and Principal Accounting Officer)February 21, 2018/s/ CHRISTOPHER CAUSEYChristopher CauseyDirectorFebruary 21, 2018/s/ RAYMOND DWEKRaymond DwekDirectorFebruary 21, 2018/s/ RICHARD GILTNERRichard GiltnerDirectorFebruary 21, 2018/s/ KATHERINE KLEINKatherine KleinDirectorFebruary 21, 2018/s/ RAYMOND KURZWEILRaymond KurzweilDirectorFebruary 21, 2018/s/ JUDY D. OLIANJudy D. OlianDirectorFebruary 21, 2018/s/ CHRISTOPHER PATUSKYChristopher PatuskyDirectorFebruary 21, 2018/s/ LOUIS W. SULLIVANLouis W. SullivanDirectorFebruary 21, 2018/s/ TOMMY G. THOMPSONTommy ThompsonDirectorFebruary 21, 201867