UTHR » Topics » Liquidity and Capital Resources

This excerpt taken from the UTHR 10-Q filed May 1, 2009.

Liquidity and Capital Resources

 

Since Remodulin’s initial approval by the FDA in 2002, we have funded our operations principally from Remodulin-related revenues and expect to do so in the future. We believe that our existing revenues and working capital resources will be adequate to fund our operations as demand for Remodulin has grown steadily since 2002 and our customer base remains stable. Furthermore, we believe that our customer base presents minimal credit risk. We have several therapies that are in the later stages of development and believe that, if approved for marketing, they will augment future revenue growth and cash flows. However, any projections of future cash needs and cash flows are inherently subject to uncertainty. To compensate for such uncertainty, we may raise additional cash in the future and believe we have options and the ability to do so. See Part II, Item 1A—Risk Factors—We have a history of losses and may not maintain profitability and Part II, Item 1A—Risk Factors—We may fail to meet third-party projections for our revenues or profits.

 

This excerpt taken from the UTHR 10-K filed Feb 26, 2009.

Liquidity and Capital Resources

        Subsequent to the FDA's initial approval of Remodulin in 2002, we have funded our operations principally from Remodulin-related revenues and expect to do so in the future. We believe that our existing revenues and working capital resources will be adequate to fund our operations as demand for Remodulin has grown steadily since 2002 and our customer base remains stable. Furthermore, we believe that our customer base presents minimal credit risk. We have several therapies that are in the later stages of development and believe that, if approved for marketing, they will augment future revenue growth and cash flows. However, any projections of future cash needs and cash flows are inherently subject to uncertainty. To compensate for such uncertainty, we may raise additional cash in the future and believe we have options and the ability to do so. See Item 1A—Risk Factors—We have a history of losses and may not maintain profitability and Item 1A—Risk Factors—We may fail to meet third-party projections for our revenue or profits.

This excerpt taken from the UTHR 10-Q filed Oct 30, 2008.

Liquidity and Capital Resources

 

Subsequent to the FDA’s initial approval of Remodulin in 2002, we have funded our operations principally from Remodulin-related revenues and expect to do so in the future. We believe that our existing revenues and working capital resources will be adequate to fund our operations. However, any projections of future cash needs and cash flows are inherently subject to uncertainty.  To compensate for such uncertainty, we may raise additional cash in the future.

 

Net cash provided by operating activities was approximately $81.4 million for the nine months ended September 30, 2008, compared to approximately $60.6 million for the nine months ended September 30, 2007. The continued growth in sales of Remodulin underlies the increase in operating cash flows for the period.

 

At September 30, 2008, we had working capital of approximately $2.8 million compared to approximately $79.7 million at December 31, 2007. The decrease in working capital reflects, in part, the investment of approximately $77.2 million of our cash toward the construction of our facilities in North Carolina and Maryland and the acquisition of other real property.  We believe we maintain adequate levels of liquid assets to satisfy our current obligations as they become due.  Furthermore, our expectation, based on our understanding of the historical behavior of holders of convertible notes with terms similar to ours, is that our Convertible Senior Notes will continue to be held until they mature in October 2011. However, based on current market conditions, some holders of our Convertible Senior Notes may convert their notes prior to maturity. We believe that as of September 30, 2008, we maintain sufficient working capital for our operating needs.

 

At September 30, 2008, we held approximately $33.4 million (net of approximately $3.4 million in unrealized losses) in illiquid non-current municipal notes with an auction reset feature (auction-rate securities). The decline in value of these securities reflects market-related liquidity conditions and not the issuers’ creditworthiness. The auction-rate securities in which we invest are collateralized by student loan portfolios that are approximately 91% guaranteed by the federal government and maintain a credit rating of AAA. Presently, we anticipate a sufficient improvement in the credit markets within the next two years to enable us to liquidate these securities without significant losses. Accordingly, we classify our auction-rate securities as a non-current asset on our consolidated balance sheet at September 30, 2008. The illiquid state of these securities is not expected to adversely affect our operations, as we believe all other sources of working capital are sufficient to enable us to hold our auction-rate securities until we can recover related unrealized losses.

 

During the quarter ended September 30, 2008, certain banks and investment firms agreed to settlements that would require them to repurchase from their clients eligible auction-rate securities at par value. Under one such settlement, our holdings of auction-rate securities may be eligible for repurchase beginning in June 2010. We have until November 14, 2008 to accept the terms of the settlement or we will not be entitled to any rights thereunder. Presently, we are evaluating the terms, conditions and risks of the offer and have not made a determination as to whether to accept the offer. If we were to accept the settlement, the repurchase right would represent a freestanding put option for accounting purposes. As such, we would recognize the fair value of the put option as an asset and a corresponding gain to earnings. In addition, unrealized losses relating to the decline in the value of our auction-rate securities would be recognized in earnings as an other-than-temporary impairment, as we would no longer demonstrate the positive intent to hold the securities until we can recover unrealized losses.

 

We are constructing a facility in Research Triangle Park, North Carolina, to include a manufacturing operation and offices.  The facility will be approximately 200,000 square feet. The manufacturing operation will be used primarily for the formulation of oral treprostinil.  In addition, it is expected to support production for other drug programs. The offices will be used by our clinical development and sales and marketing staff, who currently occupy leased premises in the area. We expect to complete construction in early 2009 at an estimated cost of approximately $107.1 million.

 

In December 2007, we began construction of our Phase II Facility which will connect to our existing Phase I Laboratory in Silver Spring, Maryland. Projected costs to construct this facility are anticipated to be $99.6 million. Construction of this facility is expected to be completed in late 2009.

 

As of September 30, 2008, inception-to-date expenditures approached $87.2 million on these construction projects.  Approximately $60.9 million was incurred during the nine months ended September 30, 2008. These costs related primarily to the construction of the Research Triangle Park, North Carolina, facility. Based on working capital we expect to generate, we decided to self-fund both of these construction projects.

 

Effective June 2, 2008, we adopted the STAP. Awards granted under the STAP entitle participants to receive in cash the appreciation in our common stock, which is calculated as the positive difference between the closing price of our common stock on the date of grant and the date of exercise. Accordingly, the STAP could require substantial cash payments as Awards

 

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vest and participants begin exercising them. Our operating budgets incorporate anticipated outlays of cash relating to the STAP, and we believe future cash flows will be sufficient to accommodate STAP expenditures.

 

Under our existing license agreements, we are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million. Royalty obligations on sales of currently marketed products range up to 10 percent of related sales.

 

This excerpt taken from the UTHR 10-Q filed Jul 31, 2008.

Liquidity and Capital Resources

 

Until May 2002, we used the proceeds received from sales of our common stock to fund the majority of our operations.  Subsequently, we have funded our operations primarily from Remodulin-related revenues, and expect to continue to do so. We believe that our existing revenues and working capital resources consisting primarily of unrestricted cash, cash equivalents and marketable investments, will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See Part II, Item 1A—Risk Factors—We have a history of losses and may not continue to be profitable and Part II,  Item 1A—Risk Factors—We may fail to meet third party projections for our revenue or profits.

 

Net cash provided by operating activities was approximately $66.4 million for the six months ended June 30, 2008, as compared to approximately $33.9 million for the six months ended June 30, 2007. The increase in cash provided by operating activities is due primarily to growth in sales of Remodulin.

 

At June 30, 2008, we had a working capital deficit of approximately $10.6 million compared to working capital of approximately $79.7 million at December 31, 2007.  The decrease in working capital reflects the use of approximately $60.1 million of our cash to invest in long-term marketable investments and spending approximately $41.5 million towards the construction of our laboratory and office facilities in North Carolina and Maryland.  Our working capital deficit at June 30, 2008, does not indicate a lack of liquidity.  We maintain adequate levels of liquid assets to satisfy our current obligations as they become due.  Furthermore, our expectation, based on our understanding of the

 

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historical behavior of holders of convertible notes with terms similar to ours, is that our 0.50% Convertible Senior Notes due October 2011 (Convertible Senior Notes) will continue to be held until they mature in October 2011.  Based on this assumption, we believe that, as of June 30, 2008, we have approximately $239.4 million of working capital available for operating needs.

 

At June 30, 2008, we held approximately $34.4 million of investments (net of approximately $2.4 million in unrealized losses) in noncurrent municipal notes with an auction reset feature (auction-rate securities). The underlying assets of these investments are student loans that are substantially backed by the federal government.  Since February 2008, auctions have failed for all of our auction-rate securities. As a result, our ability to liquidate and fully recover the carrying value of our auction-rate securities in the near term is limited. An auction failure occurs when the volume of sellers exceed buyers. All of our auction-rate securities are currently rated AAA.  If the issuers are unable to successfully close future auctions and their credit ratings deteriorate, we may be required to record an impairment charge on these investments. We anticipate that we will be able to liquidate our investments without significant losses in the long term and have the ability hold these securities until market conditions improve.  We believe these securities are not impaired, primarily due to the government guarantee of the underlying securities; however, it could take until the final maturity of the underlying notes (up to 30 years) to realize our investments’ recorded value. Based on our expected operating cash flows, and our other sources of funding, we do not anticipate the potential illiquidity of these investments will materially affect our ability to operate our business.

 

We are constructing a facility in Research Triangle Park, North Carolina, to include a manufacturing operation and offices.  The facility will be approximately 200,000 square feet.  The manufacturing operation will be used primarily to make our oral treprostinil formulation; in addition, it is expected to support the drug substance and drug product production for other programs. The offices will be used by our clinical development and sales and marketing staff, who currently occupy a leased facility in the area.  We expect to complete construction in early 2009 and incur related costs of approximately $107.1 million.

 

In December 2007, we began construction of our new combination office and laboratory facility which will connect to our existing laboratory facility in Silver Spring, Maryland. Projected costs to construct this facility are anticipated to be $99.6 million.  Construction of this facility is expected to be completed in 2009.

 

As of June 30, 2008, inception-to-date expenditures approximated $67.7 million on these construction projects.  Approximately $41.5 million was incurred during the six months ended June 30, 2008, and substantially all costs were related to the construction of the Research Triangle Park, North Carolina, facility. Based on our current amount of working capital and working capital expected to be generated from future operations, we decided to self-fund both of these construction projects.

 

We are required to pay semi-annual interest of $625,000 on April 15 and October 15 of each year to the holders of our Convertible Senior Notes until they mature in October 2011, or are otherwise converted prior to maturity.

 

Effective June 2, 2008, we adopted the STAP.  Awards granted under the STAP entitle participants to receive in cash the appreciation in our common stock, which is calculated as the positive difference between the closing price of our common stock on the date of grant and the date of exercise.  Accordingly, we could be required to make significant outlays of cash under the STAP as awards vest and participants exercise their awards.  We have changed our operating budgets’ metrics to incorporate anticipated outlays of cash under the STAP, and believe existing and future sources of funding and working capital will be sufficient to accommodate STAP expenditures.

 

Under our existing license agreements we are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million. Royalties on sales of all products currently marketed range up to 10 percent of related sales.

 

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This excerpt taken from the UTHR 10-Q filed May 1, 2008.

Liquidity and Capital Resources

 

Until May 2002, we funded the majority of our operations from the net proceeds of sales of our common stock. Since May 2002, we have funded the majority of our operations from revenues, mainly Remodulin-related, and we expect this to continue. We believe that our existing revenues, together with existing working capital resources (consisting primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See Part II, Item 1A—Risk Factors—We have a history of losses and may not continue to be profitable and Part II,  Item 1A—Risk Factors—We may fail to meet third party projections for our revenue or profits.

 

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Net cash provided by operating activities was approximately $35.0 million for the three months ended March 31, 2008, as compared to approximately $13.9 million for the three months ended March 31, 2007. The increase in cash provided by operating activities is due primarily to growth in sales of Remodulin.

 

Our working capital at March 31, 2008, was approximately $267.4 million, as compared to approximately $79.7 million at December 31, 2007.  The increase is due primarily to the reclassification of $228.0 million of our Convertible Notes from current to non-current since our Convertible Notes failed to meet the conversion criteria as of March 31, 2008.

 

We are currently constructing an approximately 200,000 square foot facility in Research Triangle Park, North Carolina, which will consist of a manufacturing operation and offices. The manufacturing operation will primarily be for our oral treprostinil formulation, although it is expected to support other programs, and the offices will be used by our clinical development and sales and marketing staffs, who currently occupy a leased facility in the area. Construction of this facility is expected to be completed in early 2009, and may cost up to $107.1 million.

 

At the end of December 2007, we began construction of our new combination office and laboratory facility which will connect to our current laboratory facility in Silver Spring, Maryland. The cost projection of this project is expected to be approximately $99.6 million. The construction of this facility is expected to take two years to complete.

 

As of March 31, 2008, we have spent approximately $44.0 million on these construction projects of which approximately $17.9 million was incurred during the three months ended March 31, 2008, of which substantially all of these costs were related to the construction of the Research Triangle Park facility. Based on the current amount of working capital and working capital to be generated from future operations, we have decided to self-fund both of these construction projects.

 

We are required to pay a semi-annual interest payment on April 15th and October 15th each year of $625,000 to our bondholders until the Convertible Notes mature in October 2011.

 

At March 31, 2008, we held approximately $35.0 million of investments in non-current municipal notes with an auction reset feature (auction rate securities). The underlying assets of these investments are student loans which are substantially backed by the federal government.  Since February 2008, auctions have failed for all of our auction rate securities. As a result, our ability to liquidate and fully recover the carrying value of our auction rate securities in the near term may be limited. An auction failure means that the parties wishing to sell the securities could not do so. All of our auction rate securities are currently rated AAA.  If the issuers are unable to successfully close future auctions and their credit ratings deteriorate, we may be required to record an impairment charge on these investments. We believe we will be able to liquidate our investments without significant losses within the next year, or to hold these securities for a longer period of time, if necessary, until market conditions improve.  We believe these securities are not impaired, primarily due to the government guarantee of the underlying securities; however, it could take until the final maturity of the underlying notes (up to 30 years) to realize our investments’ recorded value. Based on our expected operating cash flows, and our other sources of cash, we do not anticipate the potential lack of liquidity of these investments to affect our ability to operate our business.

 

Under our existing license agreements we are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million and on all arginine royalty fees received. Royalties on sales of all products currently marketed range up to 10% of sales of those products and are recorded as cost of sales in our consolidated statements of income.

 

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This excerpt taken from the UTHR 10-Q filed Nov 1, 2007.

Liquidity and Capital Resources

        Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from the net proceeds of such equity. Since 2004, we have funded the majority of our operations from revenues, mainly Remodulin-related, and we expect this to continue.

        Our working capital at September 30, 2007, was approximately $254.1 million, as compared to approximately $258.1 million at December 31, 2006. The decrease is primarily due to our purchase of approximately $67.1 million worth of our common stock during the nine months ended September 30, 2007, which was offset by cash provided by operating activities of approximately $60.6 million.

        At September 30, 2007, and December 31, 2006, restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease (discussed below under "Off Balance Sheet Arrangement") totaled approximately $39.0 million.

        Net cash provided by operating activities was approximately $60.6 million for the nine months ended September 30, 2007, as compared to approximately $55.9 million for the nine months ended September 30, 2006. The increase in cash provided by operating activities is due primarily to growth in the sales and collections of Remodulin. For the nine months ended September 30, 2007, we invested approximately $20.1 million in property, plant and equipment, as compared to approximately $13.1 million in the nine months ended September 30, 2006.

        In January 2007, we purchased an office building adjacent to our leased legal and governmental affairs office in Washington, DC for $5.7 million. We are currently constructing an approximately 200,000 square foot facility in Research Triangle Park, North Carolina, which will consist of a manufacturing operation and offices. The manufacturing operation will primarily be for oral treprostinil, although it is expected to support other programs, and the offices will be used by our clinical development and sales and marketing staffs, who currently occupy a leased facility in the area. Construction of this facility may take up to two years to complete. The project may cost up to $100 million, and we expect to fund the construction of this facility from our working capital or other financing arrangements.

        Effective in March 2007, we entered into a construction management agreement with DPR Construction, Inc. (DPR) based in Falls Church, Virginia. DPR will manage the construction of our manufacturing and office facility in Research Triangle Park, North Carolina. The agreement has a guaranteed maximum price clause in which DPR agrees that the construction cost of the facility will

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not exceed approximately $78.0 million, which amount is subject to change with agreed-upon changes to the scope of work. DPR will be responsible for covering any costs in excess of the guaranteed maximum price. If the ultimate cost of the project is less than the guaranteed maximum price, we will share a portion of these savings with DPR. In addition, DPR must pay us penalties if the construction is not completed by February 2009, which date is subject to change based on agreed-upon changes to the scope of work. DPR has no material relationship with us or any of our affiliates.

        In addition, we are in the planning phase for a new office and laboratory building which will connect to our current laboratory facility in Silver Spring, Maryland. The building of this facility is anticipated to begin in the fourth quarter of 2007. The costs are still being estimated due to continuing design and related estimation work. We intend to finance the construction of this facility through a synthetic operating lease or other financing arrangements.

        In April 2007, we paid approximately $573,000 in interest to the holders of our 0.05% Convertible Senior Notes. In October 2007, we paid a semi-annual interest payment of $625,000 to our bondholders.

        For the nine months ended September 30, 2007, we also received approximately $21.8 million in stock option exercise proceeds as compared to approximately $11.2 million in the nine months ended September 30, 2006. In addition, during the nine months ended September 30, 2007, we repurchased approximately 1.2 million shares of our common stock for approximately $67.1 million, as compared to no shares for the nine months ended September 30, 2006.

        We made milestone payments totaling $20,000 pursuant to existing license agreements during each of the nine months ended September 30, 2007 and 2006. Under our existing license agreements we are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10 percent of sales of those products.

        We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See the section entitled "Part II, Item 1A—Risk Factors—Actual consolidated revenues and net income (loss) may be different from published securities analyst projections. In addition, we have a history of losses and may not continue to be profitable" below.

        At September 30, 2007, we had, for federal income tax purposes, net operating loss carryforwards of approximately $19.8 million and business tax credit carryforwards of approximately $59.7 million, which expire at various dates from 2012 through 2024. The remaining net operating loss carryforwards are attributable to exercised stock options, the benefit of which, when realized, directly increases additional paid-in-capital. Business tax credits can offset future tax liabilities and arise from qualified research expenditures. We have been and may continue to be subject to the federal alternative minimum tax, even though we have significant net operating loss and general business credit carryforwards.

        Section 382 of the Internal Revenue Code limits the utilization of net operating losses when ownership changes occur as defined by that section. We have reviewed our ownership change position pursuant to Section 382 through December 31, 2006, and have determined that ownership changes occurred in December 1997, June 1999, and November 2004 and, as a result, the utilization of certain of our net operating loss carryforwards may be limited. However, we do not expect any significant portion of our net operating loss carryforwards or general business tax credits to expire unused. A portion of the net operating loss carryforwards continues to be reserved through a valuation allowance as of September 30, 2007.

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This excerpt taken from the UTHR 10-Q filed Aug 2, 2007.

Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from the net proceeds of such equity. Since 2004, we have funded the majority of our operations from revenues, mainly Remodulin-related, and we expect this to continue.

Our working capital at June 30, 2007, was approximately $223.5 million, as compared to approximately $258.1 million at December 31, 2006. The decrease is primarily due to our purchase of approximately $67.1 million worth of our common stock during the six months ended June 30, 2007, which was offset by cash provided by operating activities of approximately $33.3 million.

At June 30, 2007, restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease (discussed below under “Off Balance Sheet Arrangement”) totaled approximately $38.5 million, as compared to approximately $39.0 million at December 31, 2006.

Net cash provided by operating activities was approximately $33.3 million for the six months ended June 30, 2007, as compared to approximately $37.4 million for the six months ended June 30, 2006. The decrease in cash provided by operating activities is due primarily to the $3.0 million milestone payment to Toray under the amended agreement and the approximately $6.0 million of excess tax benefits from stock-based compensation recognized as a component of cash flows from financing activities. For the six months ended June 30, 2007, we invested approximately $12.8 million in property, plant and equipment, as compared to approximately $9.0 million in the six months ended June 30, 2006.

In April 2007, we paid approximately $573,000 in interest to the holders of our 0.05% Convertible Senior Notes. We are required to make another semi-annual interest payment of $625,000 in October 2007.

For the six months ended June 30, 2007, we also received approximately $13.6 million in stock option exercise proceeds as compared to approximately $5.8 million in the six months ended June 30, 2006. In addition, during the six months ended June 30, 2007, we repurchased approximately 1.2 million shares of our common stock for approximately $67.1 million, as compared to no shares for the six months ended June 30, 2006.

In January 2007, we purchased an office building adjacent to our leased legal and governmental affairs office in Washington, DC, for $5.7 million. We are currently constructing an approximately 200,000 square foot facility in Research Triangle Park, North Carolina, which will consist of a manufacturing operation and offices. The manufacturing operation will primarily be for oral treprostinil, although it is expected to support other programs, and the offices will be used by our clinical development and sales and marketing staffs, who currently occupy a leased facility in the area. Construction of this facility may take up to two years to complete. The project may cost up to $100 million, and we expect to fund the construction of this facility from our working capital or other financing arrangements.

Effective March 2007, we entered into a construction management agreement with DPR Construction, Inc. (DPR) based in Falls Church, Virginia. DPR will manage the construction of our manufacturing and office facility in Research Triangle Park, North Carolina. The agreement has a guaranteed maximum price clause in which DPR agrees that the construction cost of the facility will not exceed approximately $78.0 million, which amount is subject to change with agreed-upon changes to the scope of work. DPR will be responsible for covering any costs in excess of the guaranteed maximum price. If the ultimate cost of the project is less than the guaranteed maximum, we will share a portion of these savings with DPR. In addition, DPR must pay us penalties if the construction is not completed by

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February 2009, which date is subject to change based on agreed-upon changes to the scope of work. DPR has no material relationship with us or any of our affiliates.

In addition, we are in the planning phase for a new office and laboratory building which will connect to our current laboratory facility in Silver Spring, Maryland. The building of this facility is anticipated to begin in the latter half of 2007. The costs are still being estimated due to continuing design and related estimation work. We intend to finance the construction of this facility through a synthetic operating lease.

We made milestone payments totaling $20,000 pursuant to existing license agreements during each of the six months ended June 30, 2007 and 2006. Under our existing license agreements we are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10 percent of sales of those products.

We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See the section entitled “Part II, Item 1A—Risk Factors—Actual consolidated revenues and net income (loss) may be different from published securities analyst projections. In addition, we have a history of losses and may not continue to be profitable” below.

At June 30, 2007, we had, for federal income tax purposes, net operating loss carryforwards of approximately $38.5 million and business tax credit carryforwards of approximately $50.3 million, which expire at various dates from 2012 through 2025. The remaining net operating loss carryforwards are attributable to exercised stock options, the benefit of which, when realized, directly increases additional paid-in-capital. Business tax credits can offset future tax liabilities and arise from qualified research expenditures. We have been and may continue to be subject to the federal alternative minimum tax, even though we have significant net operating loss and general business credit carryforwards.

Section 382 of the Internal Revenue Code limits the utilization of net operating losses when ownership changes occur as defined by that section. We have reviewed our ownership change position pursuant to Section 382 through December 31, 2006, and have determined that ownership changes occurred in December 1997, June 1999, and November 2004 and, as a result, the utilization of certain of our net operating loss carryforwards may be limited. However, we do not expect any significant portion of our net operating loss carryforwards or general business tax credits to expire unused. A portion of the net operating loss carryforwards continues to be reserved through a valuation allowance as of June 30, 2007.

This excerpt taken from the UTHR 10-Q filed May 4, 2007.

Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from such net proceeds of equity. Since 2004, we funded the majority of our operations from revenues, mainly Remodulin-related, and this is expected to continue.

Our working capital at March 31, 2007 was approximately $199.7 million, as compared to approximately $258.1 million at December 31, 2006. The decrease is primarily due to our purchase of approximately $67.1 million worth of our common stock during the three months ended March 31, 2007.

At March 31, 2007, restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease (discussed below under Off Balance Sheet Arrangement) totaled approximately $38.2 million, as compared with approximately $39.0 million at December 31, 2006.

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Net cash provided by operating activities was approximately $13.1 million for the three months ended March 31, 2007, as compared to approximately $16.5 million for the three months ended March 31, 2006. The decrease in cash provided by operating activities is due primarily to the $3.0 million milestone payment to Toray under the amended license agreement. During the three months ended March 31, 2007, we paid approximately $2.0 million for year-end 2006 incentive bonus payments and recognized an excess tax benefit on stock-based compensation of approximately $2.4 million which were not present during the three-month period ending March 31, 2006. For the three months ended March 31, 2007, we invested approximately $8.0 million in cash for property, plant and equipment, as compared to approximately $1.1 million in the three months ended March 31, 2006. In January 2007, we purchased an office building adjacent to our legal and governmental affairs office which we lease in Washington, DC for $5.7 million. For the three months ended March 31, 2007, we also received approximately $8.0 million in stock option exercise proceeds as compared to $3.5 million in the three months ended March 31, 2006. In addition, during the three months ended March 31, 2007, we repurchased approximately 1.2 million shares of our common stock for $67.1 million, as compared to no shares for the three months ended March 31, 2006.

We are currently in the planning phase for building an approximately 200,000 square foot facility in Research Triangle Park, North Carolina, which will consist of a manufacturing operation and offices. The manufacturing operation will primarily be for oral treprostinil, although it is expected to support other programs, and the offices will be used by our clinical development and sales and marketing staff, which currently occupy a leased facility in the area. Construction of this facility is expected to begin during the second quarter of 2007 and may take up to two years to complete. The project may cost up to $100 million, and we expect to fund the construction of this facility from our working capital or other financing arrangements.

Effective March 9, 2007, we entered into a construction management agreement with DPR Construction, Inc. (DPR) based in Falls Church, Virginia. DPR will manage the construction of our manufacturing and office facility in Research Triangle Park, North Carolina. The agreement has a guaranteed maximum price clause in which DPR agrees that the construction cost of the facility will not exceed approximately $78.0 million, which amount is subject to change based on agreed-upon changes to the scope of work. DPR will be responsible for covering any costs in excess of the guaranteed maximum price. If the ultimate cost of the project is less than the guaranteed maximum, we will share a portion of these savings with DPR. In addition, DPR must pay us penalties if the construction is not completed by February 2009, which date is subject to change based on agreed-upon changes to the scope of work. DPR has no material relationship with us or any of our affiliates.

In addition, we are in the planning phase for a new office and laboratory building which will connect to our current laboratory facility in Silver Spring, Maryland. The building of this facility is anticipated to begin in the latter half of 2007. The costs are still being estimated due to continuing design and related estimation work. We anticipate that the construction of this facility will be financed though a synthetic operating lease.

We made milestone payments totaling $20,000 pursuant to existing license agreements during each of the three months ended March 31, 2007 and 2006. We are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10 percent of sales of those products.

We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See the section entitled “Part II, Item 1A—Risk Factors—Actual consolidated revenues and net income may be different from published securities analyst projections. In addition, we have a history of losses and may not continue to be profitable” below.

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At March 31, 2007, we had, for federal income tax purposes, net operating loss carryforwards of approximately $48.3 million and business tax credit carryforwards of approximately $48.3 million which expire at various dates from 2012 through 2025. The remaining net operating loss carryforwards are attributable to exercised stock options, the benefit of which, when realized, directly increases additional paid-in-capital. Business tax credits can offset future tax liabilities and arise from qualified research expenditures. We have been and may continue to be subject to federal alternative minimum tax and state income taxes, even though we have significant net operating loss and credit carryforwards.

Section 382 of the Internal Revenue Code limits the utilization of net operating losses when ownership changes occur as defined by that section. We have reviewed our ownership change position pursuant to Section 382 through December 31, 2006 and have determined that ownership changes occurred in December 1997, June 1999, and November 2004 and, as a result, the utilization of certain of our net operating loss carryforwards may be limited. However, we do not expect any significant portion of our net operating loss carryforwards or business tax credits will expire unused. A portion of the net operating loss carryforwards continues to be reserved through a valuation allowance as of March 31, 2007.

This excerpt taken from the UTHR 10-K filed Feb 28, 2007.

Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from such net proceeds of equity. Since May 2002, we have funded our operations from revenues, mainly Remodulin-related, and this is expected to continue. We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See “Item 1A—Risk Factors—Actual consolidated revenues and net income may be different from published securities analyst projections. In addition, we have a history of losses and may not continue to be profitable”.

In February 2005, we filed a primary shelf registration statement with the SEC to enable us to offer and sell up to five million shares of our common stock from time to time in one or more offerings. The shelf registration statement was withdrawn in March 2006 and is no longer effective.

Our working capital at December 31, 2006, was approximately $258.1 million, as compared to approximately $152.2 million at December 31, 2005.

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At December 31, 2006, restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease (discussed below under Off Balance Sheet Arrangement) totaled approximately $39.0 million, as compared with approximately $20.7 million at December 31, 2005. The increase in restricted cash and marketable investments was due to additional funds placed in escrow to provide adequate collateral under the lease and also represents interest received on these investments. Approximately $1.3 million, representing excess funds in escrow, will be taken out of the escrow account in early 2007.

Net cash provided by operating activities was approximately $61.9 million, excluding the excess tax benefit from stock-based compensation of $10.8 million, for the year ended December 31, 2006, as compared to approximately $43.7 million for the year ended December 31, 2005. The increase in cash provided by operating activities was due primarily to growth in sales and collections of Remodulin. For the year ended December 31, 2006, we invested approximately $15.6 million in cash for property, plant and equipment—mainly for new properties, equipment for the new facility in Silver Spring, Maryland, and pre-construction related expenses, of approximately $5.0 million, $4.1 million and $3.9 million, respectively—as compared to approximately $6.1 million in the year ended December 31, 2005. For the years ended December 31, 2006 and 2005, we received approximately $14.4 million and $15.0 million in stock option exercise proceeds, respectively.

We are currently in the planning phase for building a new approximately 200,000 square foot facility in Research Triangle Park, North Carolina, which will house a manufacturing operation and offices. The manufacturing operation will be for formulating oral treprostinil and the offices will be used by our clinical development and sales and marketing staff, which currently occupies a leased facility in the area. Construction of this facility is expected to begin in early 2007, may cost up to $100 million, and may take up to two years to complete, although the cost and timetable for construction is still being determined. We expect to fund the construction of this facility from our working capital.

We are also in the planning phase for a new office and laboratory building, which will connect to our current laboratory facility in Silver Spring, Maryland. The building of this facility is anticipated to begin in the latter half of 2007. The costs are still being estimated due to continuing design and related estimation work. We anticipate that the construction of this facility will be financed though a synthetic operating lease.

We made milestone payments totaling $20,000 pursuant to existing license agreements during each of the years ended December 31, 2006 and 2005. We are obligated to make royalty payments on sales of Remodulin that exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10% of sales of those products and up to 20% of arginine royalty payments received.

This excerpt taken from the UTHR 10-Q filed Nov 2, 2006.

Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from such net proceeds of equity. Since May 2002, we have funded our operations from revenues, mainly Remodulin-related, and this is expected to continue.

On October 30, 2006, we closed the sale of $250.0 million aggregate principal amount of 0.50% Convertible Senior Notes due 2011.  We received proceeds from the offering, after deducting Deutsche Bank Securities Inc.’s discount and commissions and estimated expenses, of approximately $242.0 million.  We used approximately $35.4 million of the net proceeds to pay the net cost of the derivative note hedge and warrant transactions entered into in connection with the issuance of the notes and used approximately $112.4 million to repurchase approximately 1.8 million outstanding shares of our common stock, in a privately-negotiated transaction.  See “Part II—Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds” for additional information.  We intend to use the remainder of the net proceeds for working capital or other general corporate purposes, which may include acquisitions, strategic investments or joint venture arrangements.

In February 2005, we filed a primary shelf registration statement with the SEC to enable us to offer and sell up to five million shares of our common stock from time to time in one or more offerings. The shelf registration statement was withdrawn in March 2006 and is no longer effective.

Our working capital at September 30, 2006 was approximately $160.2 million, as compared to approximately $152.2 million at December 31, 2005.

At September 30, 2006, restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease (discussed below under Off Balance Sheet Arrangement) totaled approximately $38.8 million, as compared with approximately $20.7 million at December 31, 2005. The increase in restricted cash and marketable investments was due to additional funds placed in these accounts to provide adequate collateral under the lease.

Net cash provided by operating activities was approximately $56.4 million for the nine months ended September 30, 2006, as compared to approximately $35.6 million for the nine months ended September 30, 2005. The increase in cash provided by operating activities was due primarily to growth in sales and collections of Remodulin. For the nine months ended September 30, 2006, we invested approximately $13.1 million in cash for property, plant and equipment (mainly for new properties, equipment for the new facility in Silver Spring, Maryland, and preconstruction related expenses, of approximately $5.0 million, $3.1 million and $2.8 million, respectively), as compared to approximately $4.2 million in the nine months ended September 30, 2005. For the nine-month periods ended September 30, 2006 and 2005, we received approximately $11.2 million and $11.1 million in stock option exercise proceeds, respectively.

We made milestone payments totaling $20,000 pursuant to existing license agreements during each of the nine months ended September 30, 2006 and 2005. We are obligated to make royalty payments on sales of Remodulin which exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10 percent of sales of those products.

We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See “Item 1A—Risk Factors—Actual consolidated revenues and net income may be different from published securities analyst projections. In addition, we have a history of losses and may not continue to be profitable”.

26




We recognized income tax expense of approximately $5.6 million and none for the three-month periods ended September 30, 2006 and 2005, due primarily to our expectation of incurring taxable income during 2006. We also recognized income tax expense of approximately $13.7 million and none for the nine-month periods ended September 30, 2006 and 2005, due primarily to our expectation of incurring taxable income during 2006.

At September 30, 2006, we had for federal income tax purposes net operating loss carryforwards of approximately $71.5 million and business tax credit carryforwards of approximately $31.3 million which expire at various dates from 2012 through 2024. Approximately, $70.8 million of the net operating loss carryforwards is attributable to exercised stock options, the benefit of which, when realized, directly increases additional paid-in-capital. Business tax credits can offset future tax liabilities and arise from qualified research expenditures. We have been and may continue to be subject to federal alternative minimum tax and state income taxes, even though we have significant net operating loss and tax credit carryforwards.

Section 382 of the Internal Revenue Code limits the utilization of net operating losses when ownership changes occur as defined by that section. We have reviewed our ownership change position pursuant to Section 382 and have determined that ownership changes occurred in December 1997, June 1999, and November 2004 and, as a result, the utilization of certain of our net operating loss carryforwards may be limited. However, we do not expect any significant portion of our net operating loss carry forwards or business tax credits to expire unused. A portion of the net operating loss carryforwards continues to be reserved through a valuation allowance as of September 30, 2006.

This excerpt taken from the UTHR 10-Q filed Aug 4, 2006.

Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority

22




of our operations from such net proceeds of equity. Since May 2002, we have funded our operations from revenues, mainly Remodulin-related, and this is expected to continue.

In February 2005, we filed a primary shelf registration statement with the SEC to enable us to offer and sell up to five million shares of our common stock from time to time in one or more offerings. The shelf registration statement was withdrawn in March 2006 and is no longer effective.

Our working capital at June 30, 2006 was approximately $183.4 million, as compared to approximately $152.2 million at December 31, 2005. The increase is primarily due to a net increase in cash and current marketable investments of approximately $40.9 million.

Restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease discussed below under Off Balance Sheet Arrangement at June 30, 2006 totaled approximately $38.3 million, as compared with approximately $20.7 million at December 31, 2005. The increase in restricted cash and marketable investments was due to additional funds placed in these accounts to provide adequate collateral under the lease.

Net cash provided by operating activities was approximately $37.4 million for the six months ended June 30, 2006 as compared to approximately $20.4 million for the six months ended June 30, 2005. The increase in cash provided by operating activities was due primarily to growth in sales and collections of Remodulin. For the six months ended June 30, 2006, we invested approximately $9.0 million in cash for property, plant and equipment (mainly for new properties), as compared to approximately $3.7 million in the six months ended June 30, 2005. For each of the six-month periods ended June 30, 2006 and 2005 we also received approximately $5.8 million in stock option exercise proceeds.

We made milestone payments totalling $20,000 pursuant to existing license agreements during each of the six months ended June 30, 2006 and 2005. We are obligated to make royalty payments on sales of Remodulin which exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10 percent of sales of those products.

We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See “Item 1A—Risk Factors—Actual consolidated revenues and net income may be different from published securities analyst projections. In addition, we have a history of losses and may not continue to be profitable”.

We recognized income tax expense of approximately $6.2 million and none for the three-month periods ended June 30, 2006 and 2005 due primarily to our expectation of incurring taxable income during 2006. We also recognized income tax expense of approximately $8.0 million and none for the six-month periods ended June 30, 2006 and 2005 due primarily to our expectation of incurring taxable income during 2006.

At June 30, 2006, we had for federal income tax purposes net operating loss carryforwards of approximately $83.5 million and business tax credit carryforwards of approximately $31.0 million which expire at various dates from 2012 through 2024. Approximately, $63.5 million of the net operating loss carryforwards is attributable to exercised stock options, the benefit of which, when realized, directly increases additional paid-in-capital. Business tax credits can offset future tax liabilities and arise from qualified research expenditures. We have been and may continue to be subject to federal alternative minimum tax and state income taxes, even though we have significant net operating loss and credit carryforwards.

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Section 382 of the Internal Revenue Code limits the utilization of net operating losses when ownership changes occur as defined by that section. We have reviewed our ownership change position pursuant to Section 382 and have determined that ownership changes occurred in December 1997, June 1999, and November 2004 and, as a result, the utilization of certain of our net operating loss carryforwards may be limited. However, we do not expect any significant portion of our net operating loss carry forwards or business tax credits will expire unused. A portion of the net operating loss carryforwards continues to be reserved through a valuation allowance as of June 30, 2006.

This excerpt taken from the UTHR 10-Q filed May 5, 2006.

Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering

18




expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from such net proceeds of equity. Since 2004, we funded the majority of our operations from revenues, mainly Remodulin-related, and this is expected to continue.

In February 2005, we filed a primary shelf registration statement with the SEC to enable us to offer and sell up to five million shares of our common stock from time to time in one or more offerings. The shelf registration statement was withdrawn in March 2006.

Our working capital at March 31, 2006 was approximately $169.0 million, as compared to approximately $152.2 million at December 31, 2005. The increase is primarily due to a net increase in cash and current marketable investments of approximately $22.5 million.

Restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease discussed below under Off Balance Sheet Arrangement at March 31, 2006 totaled approximately $31.1 million, as compared with approximately $20.7 million at December 31, 2005. The increase in restricted cash and marketable investments was due to additional funds placed in these accounts to provide adequate collateral under the lease.

Net cash provided by operating activities was approximately $16.5 million for the three months ended March 31, 2006 as compared to approximately $5.2 million for the three months ended March 31, 2005. The increase in cash provided by operating activities is due primarily to growth in sales and collections of Remodulin. For the three months ended March 31, 2006, we invested approximately $1.1 million in cash for property, plant and equipment, as compared to approximately $441,000 in the three months ended March 31, 2005. For the three months ended March 31, 2006 we also received approximately $3.5 million in stock option exercise proceeds as compared to $2.5 million in the three months ended March 31, 2005.

We made milestone payments totalling $20,000 pursuant to existing license agreements during each of the three months ended March 31, 2006 and 2005. We are obligated to make royalty payments on sales of Remodulin which exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10 percent of sales of those products.

We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See

This excerpt taken from the UTHR 10-K filed Feb 27, 2006.
Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from such net proceeds of equity. Since 2004, we funded the majority of our operations from revenues, mainly Remodulin-related, and this is expected to continue.

In February 2005, we filed a primary shelf registration statement with the SEC to enable us to offer and sell up to five million shares of our common stock from time to time in one or more offerings. The shelf registration statement will provide us the flexibility to take advantage of future financing opportunities on terms that we consider advantageous, with terms that would be established at the time of any such offering. The SEC declared the shelf registration statement effective in February 2005.

Our working capital at December 31, 2005 was approximately $152.2 million, as compared to approximately $96.6 million at December 31, 2004. The increase is primarily due to a net increase in cash and current marketable investments of approximately $42.7 million, and an increase in deferred tax assets of approximately $19.7 million.

Restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease discussed below under Off Balance Sheet Arrangement at December 31, 2005 totaled approximately $20.7 million, as compared with approximately $10.1 million at December 31, 2004. The increase in restricted cash and marketable investments was due to additional funds placed in these accounts to provide adequate collateral under the lease.

Net cash provided by operating activities was approximately $43.7 million for the twelve months ended December 31, 2005 as compared to approximately $20.8 million for the twelve months ended December 31, 2004. The increase in cash provided by operating activities is due primarily to growth in sales and collections of Remodulin. For the twelve months ended December 31, 2005, we invested approximately $6.1 million in cash for property, plant and equipment, as compared to approximately $5.2 million in the twelve months ended December 31, 2004.

We made milestone payments totalling $20,000 pursuant to existing license agreements during each of the twelve months ended December 31, 2005 and 2004. We are obligated to make royalty payments on sales of Remodulin which exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10% of sales of those products.

46




We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See

This excerpt taken from the UTHR 10-Q filed Nov 3, 2005.
Liquidity and Capital Resources

Until June 1999, we financed our operations principally through private placements of common stock. On June 17, 1999, we completed our initial public offering. Our net proceeds from the initial public offering and sale of the over-allotment shares, after deducting underwriting commissions and offering expenses, were approximately $56.4 million. In 2000, we issued common stock in two private placements and received aggregate net proceeds of approximately $209.0 million. Until 2002, we funded the majority of our operations from such net proceeds of equity. Since 2004, we funded the majority of our operations from revenues, mainly Remodulin-related, and this is expected to continue.

In February 2005, we filed a primary shelf registration statement with the SEC to enable us to offer and sell up to five million shares of our common stock from time to time in one or more offerings. The shelf registration statement will provide us the flexibility to take advantage of future financing opportunities on terms that we consider advantageous, with terms that would be established at the time of any such offering. The SEC declared the shelf registration statement effective in February 2005.

Our working capital at September 30, 2005 was approximately $129.8 million, as compared to approximately $96.6 million at December 31, 2004. The increase is primarily due to a net increase in cash and current marketable investments of approximately $29.9 million.

Restricted cash and marketable investments pledged to secure our obligations under the synthetic operating lease discussed below under Off Balance Sheet Arrangement at September 30, 2005 totaled approximately $20.6 million, as compared with approximately $10.1 million at December 31, 2004. The increase in restricted cash and marketable investments was due to additional funds placed in these accounts to provide adequate collateral under the lease.

Net cash provided by operating activities was approximately $35.6 million for the nine months ended September 30, 2005 as compared to approximately $17.5 million for the nine months ended September 30, 2004. The increase in cash provided by operating activities is due primarily to growth in sales and collections of Remodulin. For the nine months ended September 30, 2005, we invested approximately $4.2 million in cash for property, plant and equipment, as compared to approximately $4.3 million in the nine months ended September 30, 2004.

We made milestone payments totaling $20,000 pursuant to existing license agreements during the nine months ended September 30, 2005. We are obligated to make royalty payments on sales of Remodulin which exceed annual net sales of $25.0 million and on all arginine products. Royalties on sales of all products currently marketed range up to 10% of sales of those products.

We believe that our existing revenues, together with existing capital resources (comprised primarily of unrestricted cash, cash equivalents and marketable investments), will be adequate to fund our operations. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See Factors that may affect United Therapeutics—Actual revenue run rates, consolidated revenues and net income or losses may differ from our projections.

We did not incur income tax expense for the three and nine-month periods ended September 30, 2005 due to the availability of deductions for tax purposes and net operating loss carryforwards which will offset any taxable income for this period. As of September 30, 2005, we had available approximately $100.0 million in net operating loss carryforwards and approximately $28.3 million in business tax credit carryforwards for federal income tax purposes that expire at various dates through 2024. We have determined that portions of these carry-forward items will be subject to certain limitations on their use under Section 382 of the Internal Revenue Code. However, we do not believe that these limitations will cause the net operating loss and general business credit carryforwards to expire unused.

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