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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________________to __________________
Commission file number 0-26301
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United Therapeutics Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-1984749
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1110 Spring Street, Silver Spring, MD 20910
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(Address of (Zip Code)
Principal Executive
Offices)
(301) 608-9292
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Registrant's Telephone Number, Including Area Code
- -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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The number of shares outstanding of the issuer's common stock, par value $.01
per share, as of May 9, 2001 was 20,253,587.
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INDEX
PAGE
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PART I. FINANCIAL INFORMATION (UNAUDITED)
Item 1. Financial Statements
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of 5
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 9
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 9
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED THERAPEUTICS CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 DECEMBER 31, 2000
-------------- -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $183,403,676 $200,935,244
Investments 7,312,460 14,483,637
Accounts receivable, net of allowance of
$314,217 for 2001 and $98,281 for 2000 2,601,345 2,351,100
Prepaid expenses 573,333 1,077,608
Inventory 3,535,992 2,896,469
Other current assets 335,280 376,046
------------ ------------
Total current assets 197,762,086 222,120,104
------------ ------------
Property, plant, and equipment, net 6,023,126 5,939,036
Certificate of deposit 579,574 571,445
Goodwill and other intangible assets, net 17,087,813 17,549,224
Investments 15,065,236 -
Investment in affiliate 4,364,669 4,348,693
Other 116,270 116,482
------------ ------------
Total assets $240,998,774 $250,644,984
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,214,828 $5,273,445
Accounts payable to affiliate 742,229 678,897
Accrued expenses 3,867,470 4,522,550
Due to affiliate 1,196,497 946,497
Current portion of notes and leases payable 77,855 70,803
Other current liabilities 35,823 -
------------ ------------
Total current liabilities 12,134,702 11,492,192
Notes and leases payable, excluding
current portion 1,843,905 1,835,960
Due to affiliate 2,209,738 2,385,229
Other liabilities 18,984 193,821
------------ ------------
Total liabilities 16,207,329 15,907,202
------------ ------------
Stockholders' equity:
Preferred stock, par value $.01,
10,000,000 shares authorized
at March 31, 2001 and December
31, 2000, no shares issued - -
Series A junior participating preferred
stock, par value $ .01,
100,000 authorized at March 31,
2001 and December 31, 2000, no
shares issued - -
Common stock, par value $.01, 100,000,000
shares authorized at March 31,
2001 and December 31, 2000,
20,741,419 and 20,740,086
shares issued at March 31, 2001
and December 31, 2000, respectively,
20,371,919 and 20,434,086 shares
outstanding at March 31, 2001
and December 31, 2000, respectively 207,415 207,401
Additional paid-in capital 363,936,486 363,484,585
Accumulated deficit (134,284,672) (124,881,888)
Treasury stock at cost, 369,500 and
306,000 shares at March 31,
2001 and December 31, 2000,
respectively (5,067,784) (4,072,316)
------------ ------------
Total stockholders' equity 224,791,445 234,737,782
------------ ------------
Total liabilities and stockholders' equity $240,998,774 $250,644,984
============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
--------------------------------
2001 2000
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Revenues:
Sales $ 1,262,795 $ 259,397
Sales to affiliates 219,720 -
Grant revenue - 50,000
------------ -----------
Total revenues 1,482,515 309,397
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Operating expenses:
Research and development 8,468,853 5,776,749
General and administrative 3,919,999 3,801,150
Sales and marketing 844,111 -
Cost of sales 805,283 220,283
------------ -----------
Total operating expenses 14,038,246 9,798,182
------------ -----------
Loss from operations (12,555,731) (9,488,785)
Other income (expense):
Interest income 3,284,527 1,557,858
Interest expense (39,178) (27,996)
Equity in loss of affiliate (61,532) -
Other - net (30,870) 47,326
------------ -----------
Total other income 3,152,947 1,577,188
------------ -----------
Net loss before income tax (9,402,784) (7,911,597)
Income tax - -
============ ===========
Net loss $ (9,402,784) $(7,911,597)
============ ===========
Net loss per common share -
basic and diluted $ (.46) $ (.44)
============ ===========
Weighted average number of
common shares outstanding -
basic and diluted 20,392,682 18,053,256
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SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
------------- --------------
Cash flows from operating activities:
Net loss $ (9,402,784) $ (7,911,597)
Adjustments to reconcile net loss to net cash
used in operating
activities:
Depreciation and amortization 662,181 225,645
Provision for doubtful accounts receivable 229,155 -
Loss on disposals of equipment 14,363 -
Stock grant to Columbia University - 749,967
Stock and options issued to employees and
consultants 447,915 583,730
Amortization of discount on investments (142,904) (349,441)
Equity in loss of affiliate 61,532 -
Changes in operating assets and liabilities:
Accounts receivable (479,400) (62,812)
Inventories (736,747) (463,791)
Prepaid expenses 504,275 (212,799)
Other current assets 40,766 (74,973)
Other assets 212 (52,018)
Accounts payable 941,383 528,554
Accounts payable due to affiliate 63,332 -
Accrued expenses (655,080) 3,379
Payroll taxes withheld - (64,537)
Other current liabilities 35,823 -
Due to affiliates (2,999) -
Other liabilities (174,837) (2,841)
------------ ------------
Net cash used in operating activities (8,593,814) (7,103,534)
Cash flows from investing activities:
Purchases of property, plant, and equipment (193,107) (157,408)
Proceeds from disposals of property,
plant, and equipment 25,000 -
Acquisition of Synergy Pharmaceuticals, Inc. - (3,053,725)
Purchases of investments and certificate
of deposit (22,323,284) (7,761)
Maturities of investments 14,564,000 19,826,000
------------ ------------
Net cash provided by (used in)
investing activities (7,927,391) 16,607,106
Cash flows from financing activities:
Proceeds from issuance of common stock - 74,805,805
Proceeds from the exercise of stock options 4,000 59,462
Deferred offering costs - 159,418
Payments to repurchase common stock (995,468) -
Principal payments on notes payable (4,070) (5,540)
Principal payments on capital lease
obligations (14,825) (14,685)
------------ ------------
Net cash provided by (used in)
financing activities (1,010,363) 75,004,460
Net increase (decrease) in cash and cash
equivalents (17,531,568) 84,508,032
Cash and cash equivalents, beginning of period 200,935,244 18,279,883
------------ ------------
Cash and cash equivalents, end of period $183,403,676 $102,787,915
============ ============
Supplemental schedule of cash flow information -
Cash paid for interest $ 38,222 $ 27,996
============ ============
Noncash investing and financing activities -
Equipment acquired under a capital lease $ 33,892 $ -
============ ============
Stock issued for investment in affiliate $ - $ 1,729,669
============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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UNITED THERAPEUTICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
1. ORGANIZATION AND BUSINESS DESCRIPTION
United Therapeutics Corporation (the Company) was incorporated on June
26, 1996 under the laws of the State of Delaware. The Company is a
biotechnology company focused on commercialization of unique therapeutic
products to treat patients with cardiovascular, infectious and inflammatory
diseases.
On October 16, 2000, the Company filed a New Drug Application (NDA) for
its lead pharmaceutical product, Remodulin, for pulmonary hypertension. The
FDA granted a six month priority review for the NDA. On April 12, 2001, the
review time was extended for up to an additional 90 days to permit the FDA
more time to review additional information submitted by the Company. On
February 2, 2001, United Therapeutics submitted a Marketing Authorization
Application in France for approval of Remodulin for pulmonary arterial
hypertension. The Company has also completed Phase II clinical studies of
Remodulin for late stage peripheral vascular disease. The Company's second
lead product, beraprost, is currently in Phase III clinical trial programs for
peripheral vascular disease and pulmonary hypertension.
In December 2000, United Therapeutics expanded into angina with a
commercially available non-prescription product and further developed its
telemedicine operations with the acquisition of a cardiac arrhythmia and
ischemic monitoring business.
The Company has four wholly owned subsidiaries: Lung Rx, Inc., Unither
Pharmaceuticals, Inc. (UPI), Unither Telemedicine Services Corp. (UTSC), and
United Therapeutics Europe, Ltd.
2. BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared, without audit, pursuant to Regulation S-X of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. These
consolidated financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in United
Therapeutics' Annual Report on Form 10-K for the year ended December 31, 2000
as filed with the Securities and Exchange Commission.
In the opinion of United Therapeutics' management, any adjustments
contained in the accompanying unaudited consolidated financial statements are
of a normal recurring nature, necessary to present fairly its financial
position as of March 31, 2001 and its results of operations and its cash flows
for the three month periods ended March 31, 2001 and 2000. Interim results are
not necessarily indicative of results for an entire year.
3. MARKETABLE INVESTMENTS
Investments classified as noncurrent in the accompanying consolidated
balance sheets consist of a portfolio of high grade corporate and government
marketable debt securities maturing at various dates through 2006. These
investments are considered held-to-maturity securities and are reported at
amortized cost. At March 31, 2001, the fair market value of this portfolio was
$14,974,569.
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4. INVENTORIES
The Company manufactures certain compounds and purchases medical
supplies for use in its ongoing clinical trials. The Company purchases
components and assembles cardiac monitoring equipment. The Company contracts
with a third party manufacturer to make the HeartBar(R). These inventories are
accounted for under the first-in, first-out method. At March 31, 2001 and
December 31, 2000, inventories consisted of the following:
MARCH 31, DECEMBER 31,
2001 2000
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Remodulin (in process) $ 2,613,719 $ 1,775,047
Medical supplies 448,342 280,771
Raw chemical materials 30,015 30,015
Cardiac monitoring
equipment components 431,578 485,931
HeartBar(R) products 12,338 324,705
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$ 3,535,992 $ 2,896,469
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5.SEGMENT INFORMATION
During the quarter ended March 31, 2000, the Company was comprised of
only the pharmaceutical segment. Segment information as of and for the
three-month period ended March 31, 2001 was as follows:
CONSOLIDATED
PHARMACEUTICAL TELEMEDICINE TOTALS
-------------- ------------ ------
Revenues $ 836,738 $ 645,777 $ 1,482,515
Losses $ (8,546,338) $ (856,446) $ (9,402,784)
Total assets $229,662,761 $11,336,013 $240,998,774
The arginine business was combined with the pharmaceutical segment for
the three-month period ended March 31, 2001, where it is more appropriately
classified. There were no inter-segment revenues.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and related notes appearing in United Therapeutics'
Annual Report on Form 10-K for the year ended December 31, 2000. The following
discussion contains forward-looking statements concerning the expectation of
continued losses, cash needed for clinical trials and product research and
development contract obligations during 2001, the funding for such expenses,
expectations concerning milestone and royalty payments in 2001, the use of net
operating loss carryforwards and business tax credit carryforwards, the
completion of in-process research and development products in 2002, the levels
of working capital required for existing research and development and general
and administrative programs, and the adequacy of United Therapeutics'
resources to fund operations through 2004. These forward-looking statements
reflect the plans and beliefs of management as of the date of this report.
Actual results could differ materially from those anticipated in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below and in the section "Risk Factors" in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
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OVERVIEW
United Therapeutics is a biotechnology company focused on
commercialization of unique therapeutic products to treat cardiovascular,
inflammatory and infectious disease. United Therapeutics commenced operations
in June 1996 and, since its inception, has devoted substantially all of its
resources to its research and development programs. United Therapeutics' lead
products in development are Remodulin and beraprost. United Therapeutics has
generated pharmaceutical product revenues from arginine, synthesis services,
grants and the resale of certain medical supplies used for its pharmaceutical
products, as well as non-pharmaceutical revenues from telemedicine products.
United Therapeutics has funded its operations primarily from the proceeds of
the sale of its equity securities. United Therapeutics operates with a minimal
number of employees and has contracted with qualified third parties for
substantially all pharmaceutical development activities, including certain key
aspects of clinical trials.
United Therapeutics has incurred net losses each year since inception
and had an accumulated deficit of $134.3 million at March 31, 2001. United
Therapeutics expects to continue to incur net losses and cannot provide
assurances that, in the future, it will have pharmaceutical product sales or
become profitable.
United Therapeutics has contracted with various companies and research
organizations to coordinate and perform clinical trials and to provide other
activities related to the development of its lead products, Remodulin and
beraprost, and other products. It is anticipated that approximately $9.6
million in cash will be used during the remainder of 2001 under these
agreements. These expenses will be funded from existing working capital.
FINANCIAL POSITION
United Therapeutics has funded its operations primarily from the sales
of common stock since its inception.
Cash, cash equivalents and short-term investments at March 31, 2001 were
$190.7 million as compared to $215.4 million at December 31, 2000. The
decrease of approximately $24.7 million is due to $15.1 million being invested
in long term debt securities as well as amounts used in operations during the
three months ended March 31, 2001.
At March 31, 2001, total liabilities were approximately $16.2 million,
as compared to approximately $15.9 million at December 31, 2000 and consisted
primarily of trade payables and accrued expenses. At March 31, 2001, total
stockholders' equity was approximately $224.8 million, as compared to $234.7
million at December 31, 2000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
Revenues for the three months ended March 31, 2001 were approximately
$1.5 million, as compared to approximately $309,000 for the three months ended
March 31, 2000. Approximately $404,000 of these revenues was earned by United
Therapeutics for the synthesis and manufacture of complex molecules for third
parties. Approximately $236,000 of these revenues was earned from the resale
of pumps and supplies to distributors in connection with United Therapeutics'
lead product, Remodulin. Approximately $646,000 of these revenues was earned
by Medicomp, Inc., a wholly owned subsidiary of Unither Telemedicine Services
Corp., for the sales of cardiac monitoring devices and services. Approximately
$196,000 of these revenues was earned by Cooke Pharma, Inc., a wholly owned
subsidiary of Unither Pharmaceuticals, Inc., for sales of HeartBar products.
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Research and development expenses consist primarily of costs to acquire
pharmaceutical products and product rights for development and amounts paid to
contract research organizations, hospitals and laboratories for the provision
of services and materials for drug development and clinical trials. Research
and development expenses were $8.5 million for the three months ended March
31, 2001, as compared to $5.8 million for the three months ended March 31,
2000. The increase of approximately $2.7 million was due primarily to
increased expenses of approximately $1.3 million related to patient enrollment
in United Therapeutics' clinical trials and increased expenses of
approximately $1.4 million related to all other research.
General and administrative expenses consist primarily of salaries,
office expenses, professional fees, provision for doubtful accounts
receivables, and depreciation and amortization. General and administrative
expenses were $3.9 million for the three months ended March 31, 2001, as
compared to $3.8 million for the three months ended March 31, 2000. This
increase was due to increased expenses of approximately $590,000 related to
the provision for doubtful accounts receivables and the write-off of obsolete
inventory. Approximately $415,000 of the increase related to amortization of
goodwill and other intangible assets resulting from the acquisition of
Medicomp, Inc., Telemedical Procedures, LLC and Cooke Pharma, Inc. in December
2000. Approximately $438,000 of the increase related to professional fees,
insurance, increased staffing and related travel to support expanded
operations. This increase was offset by a nonrecurring grant of approximately
$1.5 million of stock for services in 2000.
Interest income for the three months ended March 31, 2001 was $3.3
million, as compared to approximately $1.6 million for the three months ended
March 31, 2000. This increase was attributable primarily to an increase in the
amount of cash available for investing resulting from sales of common stock
since March 31, 2000, less amounts used for operations.
IN-PROCESS RESEARCH & DEVELOPMENT
During 2000, United Therapeutics acquired Cooke Pharma in a purchase
transaction which resulted in a write-off of in-process research and
development (IPR&D) related to in-process projects that had not yet reached
technological feasibility and had no alternative future uses. The projects
under development at the valuation date were expected to address the coronary
artery disease and peripheral arterial disease markets with a total market
potential of 16 million people as well as the market that is at risk of
developing some form of heart disease (estimated at approximately 60 million
people). It is anticipated that research and development related to these
projects will be completed by early 2002.
Also during 2000, United Therapeutics acquired Medicomp in a purchase
transaction which resulted in a write-off of IPR&D related to in-process
projects that had not yet reached technological feasibility and had no
alternative future uses. At the acquisition date, Medicomp was conducting
design, development, engineering and testing activities associated with the
completion of a number of new technological innovations that were integral to
Medicomp's plan to launch a first generation wireless heart monitoring system.
It is anticipated that completion of these projects will range from 9 to 12
months.
United Therapeutics believes it is on track to complete these research
and development projects within the estimated timetables discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Until June 1999, United Therapeutics financed its operations
principally through various private placements of common stock. On June 17,
1999, United Therapeutics completed an initial public offering of 4.5 million
shares of common stock at $12.00 per share. Net proceeds to United
Therapeutics, after deducting underwriting commissions and offering expenses,
were approximately $48.9 million. On July 16, 1999, United Therapeutics closed
on the sale of 675,000 over-allotment shares to its underwriters and received
net proceeds, after deducting underwriting commissions and offering expenses,
of approximately $7.5 million. On January 18, 2000, United Therapeutics closed
on the sale of 2.5 million shares
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of common stock at $32.00 per share in a private placement and received net
proceeds, after deducting underwriting commissions and offering expenses, of
approximately $74.8 million. On July 20, 2000, United Therapeutics' closed on
the sale of 1.3 million shares of its common stock at $110.00 per share in a
private placement and received net proceeds, after deducting underwriting
commissions and offering expenses, of approximately $134.3 million.
United Therapeutics' working capital at March 31, 2001 was $185.6
million, as compared with $210.6 million at December 31, 2000. Current
liabilities at March 31, 2001 were approximately $12.1 million, as compared
with $11.5 million at December 31, 2000. United Therapeutics' debt at March
31, 2001 was $1.9 million, as compared with $1.9 million at December 31, 2000
and consisted of equipment leases and two mortgage notes, one secured by a
certificate of deposit, and both secured by the buildings and property owned
by United Therapeutics located at 1106 - 1110 Spring Street in Silver Spring,
Maryland. Both mortgages are due in monthly installments over 30 years.
Net cash used in operating activities was approximately $8.6 million
and $7.1 million for the three month periods ended March 31, 2001 and 2000,
respectively. The increase resulted from the expansion of United Therapeutics'
operations, particularly with respect to increased costs for clinical trials
and other research. For the three month periods ended March 31, 2001 and 2000,
United Therapeutics invested approximately $193,000 and $157,000 respectively,
in cash for property, plant and equipment. Net cash used by financing
activities was approximately $1.0 million for the three month period ended
March 31, 2001 and net cash provided by financing activities was approximately
$75.0 million for the three month period ended March 31, 2000. Cash flows used
in financing activities for the three month period ended March 31, 2001 were
primarily used to repurchase the company's common stock. Cash flows from
financing activities for the three month period ended March 31, 2000 were
derived primarily from the private placement of common stock in January 2000.
United Therapeutics has contracted with various companies and research
organizations to coordinate and perform clinical trials and to provide other
services related to the development of Remodulin and other products. It is
anticipated that approximately $9.6 million in cash will be used during the
remainder of 2001 under these agreements. These expenses will be funded from
existing working capital. United Therapeutics expects to make milestone
payments pursuant to existing license agreements of up to approximately $3.2
million during the remainder of 2001. United Therapeutics expects to make
royalty payments relating to sales of Remodulin, if approved by the FDA, and
HeartBar products during 2001. The royalties will range from 1% to 10% of
sales from these products. United Therapeutics anticipates that its existing
research and development and general and administrative programs will require
similar levels of working capital as has been used in recent quarters.
In December 2000, United Therapeutics provided guidance in respect of
revenues from the expected sales of its lead drug, Remodulin, based on FDA
approval of Remodulin by April 16, 2001. On April 12, 2001, United
Therapeutics announced that there would be a 90-day extension of the FDA
review of Remodulin. United Therapeutics believes that its prior revenue
projections will only be affected by the time delay in commercial launch of
Remodulin assuming approval in July 2001. United Therapeutics expects that
existing capital resources will be adequate to fund its operations through
2004. United Therapeutics' future capital requirements and the adequacy of its
available funds will depend on many factors, including:
- - Regulatory approval of Remodulin and beraprost;
- - Size and scope of its development efforts for existing and additional
products;
- - Future milestone and royalty payments;
- - Cost, timing and outcomes of regulatory reviews;
- - Rate of technological advances;
- - Status of competitive products;
- - Defending and enforcing intellectual property rights;
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- - Development of manufacturing resources or the establishment, continuation or
termination of third-party manufacturing arrangements;
- - Establishment, continuation or termination of third-party clinical trial
arrangements;
- - Development of sales and marketing resources or the establishment,
continuation or termination of third-party sales and marketing arrangements;
- - Establishment of additional strategic or licensing arrangements with other
companies; and
- - Amount, cost and risks associated with potential acquisitions.
As of March 31, 2001, United Therapeutics had available approximately
$59.5 million in net operating loss carryforwards and $19.9 million in
business tax credit carryforwards for federal income tax purposes that expire
at various dates through 2019. A portion of these carryforward items is
subject to certain limitations. United Therapeutics does not believe that the
limitations will cause the net operating loss and general business credit
carryforwards to expire unused.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." United Therapeutics adopted SFAS No. 133,
as amended by SFAS Nos. 137 and 138, on January 1, 2001. SFAS No. 133
established methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities. Because United Therapeutics holds no derivative financial
instruments and does not engage in hedging activities, adoption of SFAS No. 133
did not have an impact on United Therapeutics' financial condition or results of
operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
United Therapeutics does not have significant exposure to market risks
associated with changes in interest rates related to its corporate and
government debt securities. The interest rates on these securities are fixed,
the average maturities are short and United Therapeutics holds the securities
until maturity.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) United Therapeutics registered 4,500,000 shares of its common
stock, par value $.01 per share, and an additional 675,000 shares of its
common stock for sale to the underwriters exclusively to cover
over-allotments, on Registration Statement on Form S-1, Commission File No.
333-76409. The Securities and Exchange Commission declared United
Therapeutics' registration statement effective on June 17, 1999. The net
proceeds to United Therapeutics from the offering of the 5,175,000 shares,
after deducting expenses was approximately $56.4 million.
Since the completion of the initial public offering in June 1999
and the exercise of the over-allotment shares in July 1999, the net offering
proceeds have been fully applied to the following uses in the following
approximate amounts: $35.2 million for research and development, $766,000 to
purchase machinery, equipment and leasehold improvements, $7.2 million for
working capital and general corporate purposes (including compensation to
employees, officers, and directors in accordance with their standard
agreements), $313,000 to purchase SynQuest, Inc., $3.1 million to purchase a
15 percent interest in Synergy Pharmaceuticals, Inc., $1.0 million to purchase
a 59 percent interest in Northern Therapeutics, Inc., $8.1 million to purchase
Medicomp, Inc. and Telemedical Procedures, LLC, $200,000 to purchase Cooke
Pharma, Inc. and $493,000 to repay debt. Except as indicated, all of the
payments described above were direct or indirect payments to entities or
persons other than directors, officers, or greater than 10% owners of any
equity securities of United Therapeutics.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NO. DESCRIPTION
--- -----------
3.1 Amended and Restated Certificate of Incorporation of the Registration,
incorporated by reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-1 (Registration No. 333-76409).
3.2 Amended and Restated Bylaws of the Registrant, incorporated
by reference to Exhibit 3.2 of the Registrant's Registration
Statement (Registration No.
333-76409).
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Registration Rights Agreement, dated as of October 30, 1998, by and among
the Registrant, Merrill Lynch KECALP L.P. 1997, and Merrill Lynch KECALP
International L.P. 1997, incorporated by reference to Exhibit 4.2 of the
Registrant's Registration Statement on Form S-1 (Registration No. 333-76409).
4.3 Form of Common Stock Purchase Agreement, executed as of March 1998, by and
between the Registrant and each of Community Investment Partners III L.P.,
LLLP, Mary Ellen and Raul Evelio Perez, Trustees of the Mary Ellen Perez
revocable trust dated October 28, 1993, Edward D. Jones & Co., Oakwood
Investors I, L.L.C. and James L. Nouss, Jr., incorporated by reference to
Exhibit 4.3 of the Registrant's Registration Statement on form S-1
(Registration No. 333-76409).
4.4 Warrant to purchase shares of United Therapeutics common
stock, issued on November 2, 1998 to Cortech, Inc.,
incorporated by reference to Exhibit 4.4 of the Registrant's
Registration Statement on form S-1 (Registration No.
333-76409).
4.5 Stock Option Grant to purchase shares of United
Therapeutics' common stock, issued on September 16, 1998, to
Toray Industries, Inc., incorporated by reference to Exhibit
4.5 of the Registrant's Registration Statement on form
S-1 (Registration No. 333-76409).
4.6 Registration Rights Agreement, dated as of October 7, 1999, by and among the
Registrant and Robert M. Moriarty, Ph.D., Raju Penmasta, Ph.D., Liang Guo,
Ph.D., George W. Davis, Esq. and David Moriarty, incorporated by reference
to Exhibit 10.2 of the Registrant's Form 10-Q for the period ended September
30, 1999.
4.7 Form of Purchase Agreement dated as of December 22, 1999,
incorporated by reference to Exhibit 4.6 of the Registrant's
Registration Statement on form
S-1 (Registration No. 333-93853).
4.8 Registration Rights Agreement, dated as of June 27, 2000 by
and between the Registrant and Toray Industries, Inc.,
incorporated by reference to Exhibit 4.7 of the Registrant's
Registration Statement on Form S-3 (Registration No.
333-40598).
4.9 Stock Option Grant issued on June 27, 2000 to Toray Industries, Inc.,
incorporated by reference to Exhibit 4.8 of the Registrant's Registration
Statement on Form S-3 (Registration No. 333-40598).
4.10 Form of Stock Purchase Agreement dated July 13, 2000 incorporated by
reference to Exhibit 99.2 of the Registrant's Current Report on Form 8-K
filed July 14, 2000.
4.11 Registration Rights Agreement, dated as of December 15, 2000 by and between
the Registrant and Cooke Pharma, Inc., incorporated by reference to Exhibit
2.2 of the Registrant's Form 8-K/A dated December 15, 2000.
4.12 Escrow Agreement, dated as of December 15, 2000 among Registrant, UP
Subsidiary Corporation, Cooke Pharma, Inc., and Mahon, Patusky, Rothblatt &
Fisher, Chartered, as escrow agent, incorporated by reference to Exhibit 2.3
of the Registrant's Form 8-K/A dated December 15, 2000.
4.13 Registration Rights Agreement, dated as of December 28, 2000 by and between
the Registrant
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and Medicomp, Inc., incorporated by reference to Exhibit 2.2
of the Registrant's Form 8-K/A dated December 28, 2000.
4.14 Escrow Agreement, dated as of December 28, 2000 among
Registrant, UTSC Sub Acquisition, Inc., Medicomp, Inc.,
Mahon, Patusky, Rothblatt & Fisher, Chartered, as escrow
agent, and Chicago Title, as successor escrow agent,
incorporated by reference to Exhibit 2.3 of the Registrant's
Form 8-K/A
dated December 28, 2000.
4.15 Rights Agreement, dated as of December 17, 2000 between
Registrant and The Bank of New York, as Rights Agent,
incorporated by reference to Exhibit 4 of
Registrant's Form 8-K dated December 17, 2000.
(b) Reports on Form 8-K
On February 1, 2001, the Registrant filed a Form 8-K dated December 15,
2000 reporting an Item 2 event.
On February 1, 2001, the Registrant filed a Form 8-K dated December 28,
2000 reporting an Item 2 event.
On March 2, 2001, the Registrant filed a Form 8-K dated December 15,
2000 reporting an Item 7 event.
On March 13, 2001, the Registrant filed a Form 8-K dated December 28,
2000 reporting an Item 7 event.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
UNITED THERAPEUTICS CORPORATION
Date: May 11, 2001 /s/ Martine A. Rothblatt
-------------- ------------------------
By: Martine A. Rothblatt
Title: Chief Executive Officer
/s/ Fred T. Hadeed
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By: Fred T. Hadeed
Title: Chief Financial Officer
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