UNITED THERAPEUTICS CORP, S-1/A, 1999-06-11

UNITED THERAPEUTICS CORP
S-1/A, 1999-06-11
PHARMACEUTICAL PREPARATIONS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 1999

REGISTRATION NO. 333-76409
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3

TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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UNITED THERAPEUTICS CORPORATION
(Exact name of registrant as specified in its charter)

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DELAWARE 2836 52-1984749
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.)
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1110 SPRING STREET
SILVER SPRING, MD 20910
(301) 608-9292
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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MARTINE A. ROTHBLATT
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
UNITED THERAPEUTICS CORPORATION
1110 SPRING STREET
SILVER SPRING, MD 20910
(301) 608-9292
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:

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LADAWN NAEGLE, ESQ. LESLIE E. DAVIS, ESQ.
BRYAN CAVE LLP TESTA, HURWITZ & THIBEAULT, LLP
700 THIRTEENTH STREET, N.W. HIGH STREET TOWER
SUITE 700 125 HIGH STREET
WASHINGTON, DC 20005 BOSTON, MA 02110
(202) 508-6000 (617) 248-7000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If any of the securities registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. UNITED THERAPEUTICS MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND UNITED THERAPEUTICS IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION

JUNE 11, 1999

4,500,000 Shares
[UNITED THERAPEUTICS CORPORATION LOGO]

Common Stock
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This is the initial public offering of United Therapeutics Corporation. United
Therapeutics is offering 4,500,000 shares of common stock. United Therapeutics
anticipates that the initial public offering price will be between $15.00 and
$17.00 per share.

United Therapeutics has applied to list the common stock on the Nasdaq National
Market under the symbol "UTHR."

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.

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PER SHARE TOTAL
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Public Offering Price....................................... $ $
Underwriting Discounts and Commissions...................... $ $
Proceeds to United Therapeutics............................. $ $
</TABLE>

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

United Therapeutics has granted the underwriters the right to purchase up to
675,000 additional shares at the public offering price to cover any
over-allotments.

DEUTSCHE BANC ALEX. BROWN
A.G. EDWARDS & SONS, INC.
VECTOR SECURITIES INTERNATIONAL, INC.
, 1999
<PAGE> 3

DESCRIPTION OF PICTURES APPEARING ON THE INSIDE FRONT COVER PAGE:

Outline of the entire human body, also specifically depicting the heart and
lungs. Above the picture is a caption that reads: "Conditions Targeted by United
Therapeutics' Products". Below that caption is the phrase, "(products not yet
FDA approved)." Along the length of the body are the following captions, which
are connected by lines to various areas of the body: (a) "Chronic Obstructive
Pulmonary Disease"; (b) "Pulmonary Hypertension" with sub-captions "Early Stage"
and "Advanced"; (c) "Peripheral Vascular Disease" with sub-captions "Early
Stage" and "Late Stage"; and (d) "Osteoarthritis".

Beneath that picture is a series of three schematic representations of
artery cross sections, appearing top to bottom. Beside the first representation
is a caption that reads: "Normal Capillary Cross-Section". Below the
representation are two captions, with lines connecting the captions to the
picture, which read: (a) "Artery (through which blood flows)"; and (b) "Smooth
muscle cell layer (dilates and constricts)".

Beside the second representation is a caption that reads: "Diseased
Capillary Cross-Section". Below the representation are three captions, with
lines connecting the captions to the picture, which read: (a) "Artery becomes
constricted, blocking blood flow"; (b) "Platelets begin to adhere to the inner
surface of the artery"; and (c) "Smooth muscle cell layer thickens, further
narrowing blood vessel".

Beside the third representation is a caption that reads: "Expected Effects
of UT-15". Below the representation, there are three captions, with lines
connecting the captions to the picture, which read: (a) "A more normal blood
flow returns to the artery, and arterial blood pressure drops"; (b) "Platelets
stop adhering to the inner surface of the artery"; and (c) "Smooth muscle cells
dilate and cease proliferating".

At the bottom is the United Therapeutics logo and trademark, "Medicines for
Life(TM)".
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TABLE OF CONTENTS

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PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Use of Proceeds............................................. 14
Capitalization.............................................. 15
Dilution.................................................... 16
Selected Consolidated Financial Data........................ 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 18
Business.................................................... 22
Management.................................................. 40
Certain Transactions........................................ 49
Principal Stockholders...................................... 50
Description of Capital Stock................................ 51
Shares Eligible for Future Sale............................. 54
Underwriting................................................ 56
Lawyers..................................................... 57
Experts..................................................... 58
Additional Information...................................... 58
Index to Consolidated Financial Statements.................. F-1
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PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information and financial statements and related notes appearing elsewhere in
this prospectus. This prospectus contains forward-looking statements. The
outcome of the events described in these forward-looking statements is subject
to risks, and actual results could differ materially. The sections entitled
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Business" contain discussions of some of the
factors that could contribute to these differences.

United Therapeutics Corporation develops pharmaceuticals to treat vascular
diseases, including pulmonary hypertension and peripheral vascular disease, as
well as selected other chronic conditions. Both pulmonary hypertension and
peripheral vascular disease are characterized by reduced production of natural
prostacyclin, a highly unstable molecule that has powerful effects on
blood-vessel health. United Therapeutics' lead products, UT-15 and beraprost,
are stable synthetic forms of prostacyclin. UT-15 is delivered under the skin,
or "subcutaneously," and is currently in two multi-center Phase III clinical
trials for treating advanced pulmonary hypertension. Beraprost is delivered
orally, and United Therapeutics is beginning a Phase III clinical trial program
to treat early-stage peripheral vascular disease.

Pulmonary hypertension is a progressive, life-threatening disease that is
difficult to diagnose and treat and is currently incurable. It is characterized
by high pressure in the blood vessels between the heart and lungs, but normal
blood pressure in the rest of the body. The advanced form of pulmonary
hypertension afflicts approximately 55,000 people in North America and Europe,
and United Therapeutics believes that the potential market for UT-15 to treat
these patients is approximately $2.5 billion. The FDA has approved only one drug
treatment for advanced pulmonary hypertension. Flolan(R), an intravenous
infusion of prostacyclin, was approved in 1995 to treat primary pulmonary
hypertension, a small subset of advanced pulmonary hypertension. Flolan is
marketed by Glaxo Wellcome Inc. Flolan is an effective therapy, but has
numerous significant drawbacks. For example, Flolan has a short half life in
the body which increases the risk of an abrupt recurrence of hypertension and
death if its delivery is interrupted for even a short period of time.
Additionally, Flolan must be continuously infused through a catheter surgically
implanted in the patient's chest, creating a risk of life-threatening sepsis
infections. United Therapeutics believes that UT-15 overcomes the safety and
quality-of-life drawbacks associated with Flolan therapy and will provide
patients with a safe, convenient, non-intravenous form of life-long
prostacyclin therapy.

In October 1998, United Therapeutics completed a 26-patient, eight-week
clinical trial for UT-15 in primary pulmonary hypertension patients. Results
from this trial demonstrated that UT-15 can be safely administered to severely
ill patients on an outpatient basis, and also showed that continuous,
subcutaneous dosing of UT-15 leads to improvements in pulmonary blood pressure
and exercise ability. Patients receiving UT-15 in this study experienced
improvements similar to those achieved by patients receiving Flolan therapy for
12 weeks. Each patient who finished this study elected to receive UT-15 therapy
indefinitely.

United Therapeutics is beginning a Phase III clinical trial program for
beraprost for treating early-stage peripheral vascular disease in the United
States. Peripheral vascular disease is characterized by the progressive
degradation of the circulatory system in the legs and affects over six million
people in the United States and a similar number in Europe. Peripheral vascular
disease results in over 200,000 amputations and more than $12 billion in medical
costs annually. Clinical testing outside the United States has demonstrated that
peripheral vascular disease is amenable to prostacyclin therapy. Beraprost was
approved for the treatment of peripheral vascular disease in Japan in 1994 and
generated 1998 sales of over $225 million for Toray Industries, Inc., the
developer of the compound, and its licensees. In December 1998, Hoechst Marion

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Roussel, Inc., the European licensee of beraprost, submitted a regulatory
application for beraprost to treat peripheral vascular disease in Europe.

United Therapeutics is undertaking additional clinical studies. UT-15 is in
Phase II clinical trials to treat late-stage peripheral vascular disease, and
United Therapeutics is beginning a Phase II clinical trial program for beraprost
to treat early-stage pulmonary hypertension. United Therapeutics believes that
beraprost's current oral formulation will be complementary to UT-15 because this
formulation cannot provide the constant therapeutic levels of prostacyclin in
the body necessary to treat advanced pulmonary hypertension and late-stage
peripheral vascular disease effectively. United Therapeutics is beginning a
Phase II clinical trial program for UT-77, a compound for the treatment of
chronic obstructive pulmonary disease. Finally, United Therapeutics is beginning
a Phase II/III clinical trial program for Ketotop, a patch that delivers the
FDA-approved anti-inflammatory pain reliever ketoprofen, for the treatment of
osteoarthritis.

United Therapeutics believes that it has assembled the preeminent group of
scientists and clinicians in the field of pulmonary vascular medicine. Members
of United Therapeutics' scientific advisory board have won the Nobel Prize for
the discovery and characterization of prostacyclin, discovered Flolan and
invented UT-15. Members of United Therapeutics' senior management led the team
at Burroughs Wellcome Co. that designed the clinical trials for, obtained FDA
approval of and commercialized Flolan. These executives have similarly designed
UT-15's clinical trials, which have primary end points identical to those used
for the studies to approve Flolan. United Therapeutics believes this expertise
will be instrumental in the development and commercialization of UT-15,
beraprost and its other products.

United Therapeutics also maintains a streamlined corporate infrastructure
that is focused on strategic business management. United Therapeutics outsources
the non-core aspects of its business to substantially reduce fixed overhead and
capital investment, accelerate commercialization of its products and reduce its
business risk. For example, United Therapeutics has partnered with MiniMed Inc.,
the worldwide leader in subcutaneous continuous-flow microinfusion devices.
Under the terms of this strategic alliance, MiniMed will market UT-15 through a
dedicated sales force, provide the pager-sized infusion device to patients,
train patients and care providers in its use and obtain third-party
reimbursement.

United Therapeutics' objective is to become a leader in the development and
commercialization of drugs to treat pulmonary and vascular diseases, as well as
other selected chronic conditions. To achieve this objective, United
Therapeutics is pursuing the following strategies:

- Capitalize on its experience and expertise in pulmonary vascular
medicine;

- Establish its prostacyclin products as the standard of care for pulmonary
hypertension and peripheral vascular disease;

- Minimize fixed costs and corporate overhead through outsourcing and
partnering; and

- Obtain licenses for, develop and commercialize selected other product
candidates.

United Therapeutics was incorporated in Delaware in June 1996 under the
name Lung Rx, Inc. Its principal office is located at 1110 Spring Street, Silver
Spring, Maryland 20910, and its telephone number there is (301) 608-9292. United
Therapeutics' clinical development office is located at 68 T.W. Alexander Drive,
Research Triangle Park, North Carolina 27709, and its telephone number there is
(919) 485-8350. Information on United Therapeutics' web site is not a part of
this prospectus.

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THE OFFERING

Common stock offered by United
Therapeutics.............................. 4,500,000 shares

Common stock to be outstanding after the
offering.................................. 15,226,967 shares

Use of proceeds........................... For clinical development and
commercialization of its existing
products, working capital and
general corporate purposes. See
"Use of Proceeds."

Proposed Nasdaq National Market symbol.... UTHR

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following tables summarize the financial data for United Therapeutics'
business. The consolidated balance sheet data are presented as of March 31,
1999, and have been adjusted to reflect the sale of the 4,500,000 shares of
common stock United Therapeutics is offering at an assumed public offering price
of $16.00 per share (after deducting estimated underwriting discounts and
commissions and estimated offering expenses) and the application of the
estimated net proceeds. See the consolidated financial statements and related
notes appearing elsewhere in this prospectus, "Use of Proceeds" and
"Capitalization."

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<CAPTION>
MARCH 31, 1999
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ACTUAL AS ADJUSTED
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(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents and short-term investments........ $ 15,429 $ 81,239
Total assets................................................ 17,765 83,575
Accumulated deficit......................................... (28,005) (28,005)
Total stockholders' equity.................................. 15,468 81,278
</TABLE>

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(1) See Note 2 of Notes to Consolidated Financial Statements for a description
of the computation of basic and diluted net loss per share.

-----------------------

This prospectus contains trademarks owned by other companies.

Unless otherwise specifically stated, information throughout this
prospectus (a) gives effect to a one-for-three reverse split of United
Therapeutics' common stock to be effected prior to the effectiveness of the
registration statement of which this prospectus is a part, and (b) assumes no
exercise of the underwriters' over-allotment option.
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RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks and uncertainties described below and the other information in this
prospectus before deciding whether to invest in United Therapeutics' common
stock. If any of the following risks actually occur, United Therapeutics'
business, financial condition or operating results could be materially adversely
affected. This could cause the market price of the common stock to decline, and
you may lose part or all of your investment.

IF UNITED THERAPEUTICS' PRODUCTS FAIL IN CLINICAL STUDIES, UNITED THERAPEUTICS
WILL BE UNABLE TO OBTAIN FDA APPROVAL AND WILL NOT BE ABLE TO SELL THOSE
PRODUCTS.

In order to sell its products, United Therapeutics must receive regulatory
approval for its products. To obtain those approvals, United Therapeutics must
conduct clinical studies demonstrating that the drug and the delivery mechanism
for the drug are safe and effective. If United Therapeutics cannot obtain FDA
approval for a product, that product cannot be sold and United Therapeutics'
revenues will suffer. United Therapeutics has started Phase III clinical studies
for UT-15 for advanced pulmonary hypertension and Phase II clinical studies for
UT-15 for late-stage peripheral vascular disease. United Therapeutics is
beginning a Phase III clinical trial program to treat early-stage peripheral
vascular disease with beraprost and a Phase II clinical trial program to treat
early-stage pulmonary hypertension with beraprost. United Therapeutics is still
developing studies for its other products. Although United Therapeutics'
products, such as UT-15 and beraprost, appear promising based on clinical
studies to date, they may not be successful in later clinical studies. United
Therapeutics' ongoing clinical studies might be delayed or halted for various
reasons, including:

- The drug is not effective, or physicians think that the drug is not
effective;

- Patients experience severe side effects during treatment;

- Patients die during the clinical study because their disease is too
advanced or because they experience medical problems that are not related
to the drug being studied;

- Patients do not enroll in the studies at the rate United Therapeutics
expects; and

- Drug supplies are not sufficient to treat the patients in the studies.

In addition, the FDA and foreign regulatory authorities have substantial
discretion in the approval process. The FDA and foreign regulatory authorities
may not agree that United Therapeutics has demonstrated that its products are
safe and effective.

IF UNITED THERAPEUTICS CANNOT MAINTAIN REGULATORY APPROVALS FOR ITS PRODUCTS, IT
CANNOT SELL THOSE PRODUCTS AND ITS REVENUES WILL SUFFER.

The process of obtaining and maintaining regulatory approvals for new drugs
is lengthy, expensive and uncertain. The manufacturing, distribution,
advertising and marketing of these products are subject to extensive regulation.
Any new product approvals United Therapeutics receives in the future could
include significant restrictions on the use or marketing of United Therapeutics'
products. Product approvals, if granted, can be withdrawn for failure to comply
with regulatory requirements or upon the occurrence of adverse events following
commercial introduction of the products. If approvals are withdrawn for a
product, United Therapeutics cannot sell that product and its revenues will
suffer. In addition, governmental authorities could seize United Therapeutics'
products or force United Therapeutics to recall its products. Finally, United
Therapeutics and its officers and directors could be subject to civil and
criminal penalties.

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UNITED THERAPEUTICS HAS A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE.

United Therapeutics has lost money since its inception in 1996, and its
accumulated deficit was approximately $28.0 million at March 31, 1999. United
Therapeutics expects to incur substantial additional losses over the next
several years, whether or not it generates revenue, as it expands clinical
studies and continues to develop its products. United Therapeutics expects its
quarterly and annual operating results to fluctuate, depending primarily on the
following factors:

- Timing of regulatory approvals and commercial sales of its products;

- Level of patient demand for its products;

- Timing of payments to licensors and corporate partners; and

- Timing of investments in new technologies.

All of United Therapeutics' products are in clinical studies, and United
Therapeutics is not yet selling any products. United Therapeutics might not
obtain regulatory approvals for its products, including its lead products, UT-15
and beraprost, and may not be able to sell its products commercially. Even if
United Therapeutics sells its products, United Therapeutics may not ever be
profitable and may not be able to sustain any profitability it achieves. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DISCOVERIES OR DEVELOPMENTS OF NEW TECHNOLOGIES BY OTHERS MAY MAKE UNITED
THERAPEUTICS' PRODUCTS OBSOLETE.

Other companies may conduct research, make discoveries or introduce new
products that render all or some of United Therapeutics' technologies and
products obsolete or not commercially viable. Researchers are continually
learning more about pulmonary and vascular diseases that may lead to new
technologies to treat the diseases. In addition, alternative approaches to
treating chronic diseases, such as gene therapy, may make United Therapeutics'
products obsolete or noncompetitive.

UNITED THERAPEUTICS' PRODUCTS MAY NOT BE COMMERCIALLY SUCCESSFUL BECAUSE
PHYSICIANS AND PATIENTS MAY NOT ACCEPT THEM.

Even if regulatory authorities approve United Therapeutics' products, those
products may not be commercially successful. United Therapeutics expects that
most of its products, including UT-15, will be very expensive. Patient
acceptance of and demand for United Therapeutics' products will depend largely
on the following factors:

- Acceptance by physicians and patients of United Therapeutics' products as
safe and effective therapies;

- Reimbursement of drug and treatment costs by third-party payors;

- Pricing of alternative products;

- Convenience and ease of administration of United Therapeutics' products;
and

- Prevalence and severity of side effects associated with United
Therapeutics' products.

IF THIRD-PARTY PAYORS WILL NOT REIMBURSE PATIENTS FOR UNITED THERAPEUTICS' DRUG
PRODUCTS, SALES WILL SUFFER.

United Therapeutics' commercial success will depend in part on third-party
payors agreeing to reimburse patients for the costs of United Therapeutics'
products. Third-party payors frequently challenge the pricing of new drugs.
United Therapeutics expects that its products will be very expensive.
Third-party payors may not approve United Therapeutics' products for
reimbursement.

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If third-party payors do not approve a United Therapeutics' product for
reimbursement, sales will suffer as patients will opt for a competing product
that is approved for reimbursement.

UNITED THERAPEUTICS RELIES ON THIRD PARTIES TO DEVELOP, MARKET, DISTRIBUTE AND
SELL ITS PRODUCTS AND THOSE THIRD PARTIES MAY NOT PERFORM.

United Therapeutics does not have the ability to independently conduct
clinical studies, obtain regulatory approvals, market, distribute or sell its
products and intends to rely on experienced third parties to perform all of
those functions. United Therapeutics may not locate acceptable contractors or
enter into favorable agreements with them. If third parties do not successfully
carry out their contractual duties or meet expected deadlines, United
Therapeutics will be unable to get marketing approvals and will be unable to
sell its products. MiniMed Inc. is United Therapeutics' exclusive partner for
the subcutaneous delivery of UT-15 using the MiniMed(R) microinfusion device in
the field of pulmonary hypertension. MiniMed will be responsible for marketing,
sales and customer service. United Therapeutics is dependent on MiniMed's
experience, expertise and performance to successfully market and sell UT-15 for
pulmonary hypertension. If MiniMed is unsuccessful in its efforts, United
Therapeutics' revenues will suffer. See "Business -- The MiniMed Strategic
Alliance."

UNITED THERAPEUTICS DEPENDS ON THIRD PARTIES TO SYNTHESIZE AND MANUFACTURE ITS
PRODUCTS AND THOSE THIRD PARTIES MAY NOT PERFORM.

United Therapeutics does not have the resources, facilities or experience
to manufacture its products itself. The company depends on third parties for the
manufacture of all its products. United Therapeutics is relying on Cook Imaging
Corporation, SynQuest, Inc. and Schweizerhall, Inc. for the formulation and
manufacture of UT-15. United Therapeutics relies on Magellan Laboratories
Incorporated to test the purity and stability of each batch of UT-15. United
Therapeutics relies exclusively on Toray Industries, Inc. to manufacture
beraprost and on Global Medical Enterprises Ltd. to supply Ketotop. United
Therapeutics' manufacturing strategy presents the following risks:

- The manufacturing processes for some of United Therapeutics' products
have not been tested in quantities needed for commercial sales;

- Delays in scale-up to commercial quantities could delay clinical studies,
regulatory submissions and commercialization of United Therapeutics'
products;

- A long lead time is needed to manufacture UT-15, and the manufacturing
process is complex;

- Manufacturers of United Therapeutics' products are subject to the FDA's
good manufacturing practices regulations and similar foreign standards,
and United Therapeutics does not have control over compliance with these
regulations by its third-party manufacturers;

- If United Therapeutics has to change to another manufacturing contractor,
FDA and comparable foreign regulators would require new testing and
compliance inspections and the new manufacturer would have to be educated
in the processes necessary for the production of UT-15 or any other
affected product;

- Without satisfactory long-term agreements with its manufacturers, United
Therapeutics will not be able to develop or commercialize its products as
planned or at all; and

- United Therapeutics may not have intellectual property rights, or may
have to share intellectual property rights, to any improvements in the
manufacturing processes or new manufacturing processes for its products.

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Any of these factors could delay clinical studies or commercialization of
United Therapeutics' products, entail higher costs and result in United
Therapeutics being unable to effectively sell its products. See
"Business -- Government Regulation."

IF THE LICENSES UNITED THERAPEUTICS DEPENDS ON ARE BREACHED OR TERMINATED,
UNITED THERAPEUTICS WOULD LOSE ITS RIGHT TO DEVELOP AND SELL THE PRODUCTS
COVERED BY THE LICENSES.

United Therapeutics acquires or licenses drugs which have been discovered
and initially developed by others. In addition, United Therapeutics has obtained
and will be required to obtain licenses to third-party technology to conduct its
business, including licenses for its products and a license for the MiniMed
microinfusion device. This dependence on licenses has the following risks:

- United Therapeutics may not be able to obtain future licenses at a
reasonable cost or at all;

- If any of United Therapeutics' licenses are terminated, United
Therapeutics will lose its rights to develop and market some or all of
its products;

- The licenses that United Therapeutics holds generally provide for
termination by the licensor in the event United Therapeutics breaches the
license agreement, including by failing to pay royalties and other fees
on a timely basis;

- In the event that Glaxo Wellcome or Pharmacia & Upjohn terminate their
agreements, United Therapeutics will have no further rights to utilize
their patents or trade secrets to develop and commercialize UT-15; and

- If licensors fail to maintain the intellectual property licensed to
United Therapeutics as required by most of United Therapeutics' license
agreements, United Therapeutics may lose its rights to develop and market
some or all of its products and may be forced to incur substantial
additional costs to maintain the intellectual property itself or force
the licensor to do so.

IF UNITED THERAPEUTICS' PATENT AND OTHER INTELLECTUAL PROPERTY PROTECTION IS
INADEQUATE, UNITED THERAPEUTICS' SALES AND PROFITS COULD SUFFER OR COMPETITORS
COULD FORCE UNITED THERAPEUTICS' PRODUCTS COMPLETELY OUT OF THE MARKET.

The U.S. patent for the UT-15 composition of matter expires in 2000, and
the U.S. patent for the method of treating pulmonary hypertension with UT-15
expires in 2009. The U.S. patents for the beraprost composition of matter and
synthesis expire in 2003 and 2010. United Therapeutics may not be able to extend
these or any other patents. Ketotop is patented in the United States, but not in
any other jurisdiction where United Therapeutics has marketing rights.
Competitors may develop products based on the same active ingredients as United
Therapeutics' products, including UT-15, and market those products after the
patents expire, or may design around United Therapeutics' existing patents. If
this happens, United Therapeutics' sales would suffer and United Therapeutics'
profits could be severely impacted.

The issued beraprost patents do not cover methods of treating any disease,
including pulmonary hypertension or peripheral vascular disease, using
beraprost. The issued Ketotop patent in the United States does not cover methods
of treating osteoarthritis with Ketotop. Patents may be issued to others which
prevent the manufacture or sale of United Therapeutics' products. United
Therapeutics may have to license those patents and pay significant fees or
royalties to the owners of the patents in order to keep marketing its products.
This would cause profits on sales to suffer.

United Therapeutics has filed a patent application in the United States for
the use of UT-15 to treat peripheral vascular disease, but this and other patent
applications which have been or

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may be filed by United Therapeutics may not issue. The scope of any patent that
issues may not be sufficient to protect United Therapeutics' technology. The
laws of foreign jurisdictions in which United Therapeutics intends to sell its
products may not protect the company's rights to the same extent as the laws of
the United States.

In addition to patent protection, United Therapeutics also relies on trade
secrets, proprietary know-how and technology advances. United Therapeutics
enters into confidentiality agreements with its employees and others, but these
agreements may not be effective in protecting the company's proprietary
information. Others may independently develop substantially equivalent
proprietary information or obtain access to United Therapeutics' know-how.

Litigation, which is very expensive, may be necessary to enforce or defend
United Therapeutics' patents or proprietary rights and may not end favorably for
United Therapeutics. Any of United Therapeutics' licenses, patents or other
intellectual property may be challenged, invalidated, canceled, infringed or
circumvented and may not provide any competitive advantage to United
Therapeutics.

UNITED THERAPEUTICS MAY NOT HAVE, OR MAY HAVE TO SHARE RIGHTS TO, FUTURE
INVENTIONS ARISING FROM ITS OUTSOURCING AGREEMENTS AND MAY LOSE POTENTIAL
PROFITS OR SAVINGS.

Pursuant to the MiniMed agreement, any new inventions or intellectual
property that arise from United Therapeutics' activities with MiniMed will be
owned jointly by United Therapeutics and MiniMed. Under United Therapeutics'
agreement with Cortech, any inventions or intellectual property that relate to
UT-77 will be owned by the company that employs the person who made the
discovery. Under United Therapeutics' agreement with SynQuest, SynQuest will own
all inventions and intellectual property (including new or improved
manufacturing processes or chemical syntheses) developed during the term of the
agreement that are not directly and solely related to UT-15, the initial process
to make UT-15 and any new procedures to make UT-15. If United Therapeutics does
not have rights to new developments or inventions that arise during the terms of
these agreements, or United Therapeutics has to share the rights with others,
United Therapeutics will lose the benefit of the new rights which may mean a
loss of future profits or savings generated from improved technology.

IF UNITED THERAPEUTICS' HIGHLY QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL
LEAVE THE COMPANY, ITS BUSINESS MAY SUFFER.

United Therapeutics is highly dependent on its current management and key
scientific and technical personnel, including Ms. Martine A. Rothblatt, Chairman
of the Board and Chief Executive Officer, Dr. James W. Crow, President and Chief
Operating Officer, Dr. Gilles Cloutier, Executive Vice President, Business
Development and Chief Financial Officer, Shelmer D. Blackburn, Jr., Director of
Operations, and Dr. Roger Jeffs, Director of Research, Development and Medical.
The company does not maintain key person life insurance. United Therapeutics'
success will depend in part on retaining the services of its existing management
and key personnel and attracting and retaining new highly qualified personnel.
Expertise in the field of pulmonary and vascular disease is not generally
available in the market, and competition for qualified management and personnel
is intense.

UNITED THERAPEUTICS MAY NOT SUCCESSFULLY COMPETE WITH ESTABLISHED DRUG
COMPANIES.

United Therapeutics competes with established drug companies for funding,
access to licenses, personnel and third-party collaborators and during product
development. Almost all of these companies have substantially greater financial,
marketing, sales, distribution and technical resources, and more experience in
research and development, clinical trials and regulatory matters, than United
Therapeutics. United Therapeutics is aware of existing treatments that will
compete with its products. If United Therapeutics cannot successfully compete
with new or

9
<PAGE> 14

existing products, United Therapeutics' marketing and sales will suffer and it
may not ever be profitable. See "Business -- Competition."

IF UNITED THERAPEUTICS NEEDS ADDITIONAL FINANCING AND CANNOT OBTAIN IT, PRODUCT
DEVELOPMENT AND SALES MAY BE LIMITED.

United Therapeutics may need to spend more money than currently expected
because it may need to change its product development plans or product offerings
to address difficulties with clinical studies or preparing for commercial sales.
United Therapeutics may not be able to obtain additional funds on commercially
reasonable terms or at all. If additional funds are not available, United
Therapeutics may be compelled to delay clinical studies, curtail operations or
obtain funds through collaborative arrangements that may require it to
relinquish rights to certain of its products or potential markets.

UNITED THERAPEUTICS MAY NOT HAVE ADEQUATE INSURANCE AND MAY HAVE SUBSTANTIAL
EXPOSURE TO PAYMENT OF PRODUCT LIABILITY CLAIMS.

The testing, manufacture and marketing of human drugs involves product
liability risks. United Therapeutics has product liability insurance providing
coverage of up to $5 million for each claim, and $5 million for all claims
combined. United Therapeutics may not be able to maintain this product liability
insurance at an acceptable cost, if at all, and this insurance may not provide
adequate coverage against potential losses. If claims or losses exceed United
Therapeutics' liability insurance coverage, United Therapeutics may go out of
business.

THE YEAR 2000 PROBLEM MAY CAUSE INTERRUPTIONS IN UNITED THERAPEUTICS' SUPPLY OF
DRUG PRODUCTS FOR CLINICAL TRIALS AND DELAY THE COMPLETION OF THOSE TRIALS.

United Therapeutics is dependent on the proper functioning of its computer
and data-dependent systems and their ability to input, store, manipulate and
output dates for the years 2000 or thereafter without error or
interruption -- commonly known as the Year 2000 problem. These include, but are
not limited to, its information, business, finance, operations and service
systems. In addition, United Therapeutics relies on the proper functioning of
the systems of third parties. If these or other systems fail or malfunction,
United Therapeutics' business could be negatively affected. Even if United
Therapeutics acts in a timely manner to complete all of its Year 2000
assessments and to identify, develop and implement remedial plans which United
Therapeutics believes are adequate, some problems may not be identified or
corrected in time to prevent negative consequences to United Therapeutics'
business and operations. As of March 31, 1999, United Therapeutics has incurred
$50,000 to address the Year 2000 problem. United Therapeutics believes that its
worst case scenario includes a power interruption and a lack of drug products to
support clinical studies. United Therapeutics is implementing a contingency plan
to cover this situation by building up inventories of its drug products to
sustain its studies for 12 months and has purchased a backup generator to deal
with power failures. See "Management's Discussion and Analysis of Financial
Condition -- Year 2000 Readiness Disclosure Statement."

THE MARKET PRICE OF UNITED THERAPEUTICS' COMMON STOCK AFTER THE OFFERING MAY NOT
EXCEED THE OFFERING PRICE.

Prior to this offering, there was no public market for the common stock,
and a significant public trading market may not develop or continue after this
offering. The underwriters and United Therapeutics determined the initial public
offering price of the common stock through negotiations. If the market price of
the common stock after the offering does not exceed the initial public offering
price, investors will not realize any return on their investment in United
Therapeutics. If the market price of the common stock after the offering is less
than the initial public offering price, investors may lose some or all of their
investment.
10
<PAGE> 15

UNITED THERAPEUTICS' STOCK PRICE COULD BE VOLATILE AND COULD DECLINE.

The market prices for securities of drug companies are highly volatile, and
there are significant price and volume fluctuations in the market that may be
unrelated to particular companies' operating performances. United Therapeutics'
stock price could decline suddenly due to the following factors:

- Results of clinical trials;

- Timing of regulatory approvals;

- Fluctuations in operating results;

- Announcements by United Therapeutics or others of technological
innovations or new products;

- Failure to meet estimates or expectations of securities analysts;

- Rate of product acceptance;

- Developments in patent or other proprietary rights;

- Public concern as to the safety of products developed by United
Therapeutics or by others;

- Future sales of substantial amounts of common stock by existing United
Therapeutics stockholders; and

- General market conditions.

If investors in United Therapeutics' common stock cannot resell their
shares at or above the initial public offering price, investors will be forced
to hold their shares or sell them at a loss. See "Shares Eligible for Future
Sale" and "Underwriting."

FUTURE SALES OF SHARES MAY DEPRESS THE STOCK PRICE.

If a substantial number of shares of United Therapeutics' common stock is
sold in the public market after this offering, or investors become concerned
that substantial sales might occur, the market price of the common stock could
decrease. Such a decrease could make it difficult for United Therapeutics to
raise capital by selling stock or to pay for acquisitions using stock.

There will be 15,226,967 shares of common stock outstanding immediately
after this offering and 1,174,458 shares issuable upon exercise of outstanding
options and warrants. Of these shares, all of the 4,500,000 shares offered
hereby will be freely tradable unless purchased by affiliates of United
Therapeutics.

Of the remaining 10,726,967 shares of common stock, which excludes
1,174,458 shares issuable upon exercise of outstanding options and warrants,
approximately 10,412,590 shares are subject to lock-up agreements with the
underwriters. The lock-up agreements prohibit sales or other dispositions of any
shares of common stock owned by the stockholders for 180 days after the
offering. Each of United Therapeutics' executive officers and directors have
signed lock-up agreements. United Therapeutics has agreed to similar
restrictions. After these lock-up agreements expire, all but approximately
666,666 of the shares subject to these lock-up agreements could be sold
immediately in the public market, subject in some cases to volume and other
restrictions.

Deutsche Bank Securities Inc. may release any or all of the shares subject
to lock-up agreements at any time without notice.

After the 180-day lock-up period expires, United Therapeutics expects to
file a registration statement covering 14,939,517 shares of common stock
issuable upon exercise of options and

11
<PAGE> 16

other grants pursuant to the company's equity incentive plan. United
Therapeutics may issue additional shares:

- to employees;

- in connection with corporate alliances;

- in connection with acquisitions; and

- to raise capital.

In addition, the holders of 797,220 shares of common stock are entitled to
registration rights.

As a result of these factors, sales of a substantial number of shares of
common stock in the public market could occur at any time. See "Shares Eligible
for Future Sale."

EXISTING DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS OF UNITED
THERAPEUTICS WILL RETAIN A SUBSTANTIAL BLOCK OF STOCK EVEN AFTER THIS OFFERING
AND MIGHT BE ABLE TO DIRECT THE OUTCOME OF MATTERS REQUIRING STOCKHOLDER
APPROVAL.

United Therapeutics' directors, executive officers and principal
stockholders will beneficially own approximately 42% of its outstanding common
stock immediately following this offering. Accordingly, these shareholders as a
group might be able to direct the outcome of matters requiring approval by
United Therapeutics' stockholders, including the election of its directors. Such
stockholder control could delay or prevent a change of control of United
Therapeutics.

BECAUSE OF "ANTI-TAKEOVER" PROVISIONS IN UNITED THERAPEUTICS' CERTIFICATE OF
INCORPORATION AND BYLAWS, A THIRD PARTY MAY BE DISCOURAGED FROM MAKING A
TAKEOVER OFFER WHICH COULD BE BENEFICIAL TO UNITED THERAPEUTICS AND THE PUBLIC
STOCKHOLDERS.

Certain provisions of United Therapeutics' Amended and Restated Certificate
of Incorporation and Amended and Restated By-Laws, and the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, could delay
or prevent a third party from acquiring United Therapeutics or replacing members
of the United Therapeutics board of directors, even if the acquisition or the
replacements would be beneficial to United Therapeutics' stockholders. These
factors could also reduce the price that certain investors might be willing to
pay for shares of the common stock and result in the market price being lower
than it would be without these provisions.

STOCKHOLDERS WILL EXPERIENCE SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK VALUE
OF THEIR COMMON STOCK.

Investors purchasing shares of common stock in this offering will incur
immediate and substantial dilution. Based on the net tangible book value of
United Therapeutics' common stock as of March 31, 1999, dilution in net tangible
book value to investors purchasing shares of common stock in this offering would
be $10.68 per share, assuming an initial public offering price of $16.00 per
share. In addition, investors purchasing shares of common stock in this offering
may incur additional dilution to the extent outstanding options and warrants are
exercised or additional shares of capital stock are issued.

BECAUSE MANAGEMENT WILL HAVE BROAD DISCRETION OVER THE PROCEEDS OF THE OFFERING,
THE OFFERING PROCEEDS MAY BE USED IN WAYS STOCKHOLDERS DO NOT DEEM ADVISABLE.

Assuming an initial public offering price of $16.00 per share, United
Therapeutics will receive approximately $65,810,000 from the sale of the shares
of common stock offered by this prospectus. The company expects to use the net
proceeds of the offering for clinical development and commercialization of its
existing products, working capital and general corporate purposes.

12
<PAGE> 17

United Therapeutics also might use a portion of the net proceeds to acquire or
invest in complementary businesses, products and technologies. United
Therapeutics currently has no specific plans for the balance of the proceeds.
Consequently, management and the board of directors of United Therapeutics will
have the discretion to allocate the net proceeds to uses that stockholders may
not deem advisable. If management spends the funds unwisely, United Therapeutics
may not have sufficient working capital to become profitable.

IF STOCKHOLDERS DO NOT RECEIVE DIVIDENDS, STOCKHOLDERS MUST RELY ON STOCK
APPRECIATION FOR ANY RETURN ON THEIR INVESTMENT IN UNITED THERAPEUTICS.

United Therapeutics has never declared or paid cash dividends on any of its
capital stock. United Therapeutics currently intends to retain its earnings for
future growth and therefore does not anticipate paying cash dividends in the
future. As a result, only appreciation of the price of the common stock will
provide a return to investors in this offering.

13
<PAGE> 18

USE OF PROCEEDS

United Therapeutics estimates that the net proceeds from the sale of the
4,500,000 shares of common stock that it is offering will be $65,810,000 after
deducting estimated underwriters' discounts and commissions and estimated
offering expenses and assuming an initial public offering price of $16.00 per
share. If the underwriters' over-allotment option is exercised in full, United
Therapeutics estimates that the net proceeds will be $75,854,000.

United Therapeutics anticipates using the net proceeds from this offering
for clinical development and commercialization of its existing products, working
capital and general corporate purposes. United Therapeutics will retain broad
discretion over the use of the net proceeds of this offering. The amounts and
timing of the expenditures may vary significantly depending on numerous factors,
such as the progress of the company's research and development efforts,
technological advances and the competitive environment for the company's
products. United Therapeutics also might use a portion of the net proceeds to
acquire or invest in complementary businesses, products and technologies. United
Therapeutics is not currently planning any acquisition, and no portion of the
net proceeds has been allocated for any specific acquisition.

United Therapeutics believes that its available cash, together with the net
proceeds of this offering, will be sufficient to meet its capital requirements
through 2002. Pending use of the net proceeds, United Therapeutics intends to
invest the net proceeds in short-term, interest-bearing, investment-grade
securities.

14
<PAGE> 19

CAPITALIZATION

The following table sets forth United Therapeutics' capitalization as of
March 31, 1999, (a) on an actual basis and (b) as adjusted to give effect to the
sale of the shares of common stock it is offering at an assumed initial public
offering price of $16.00 per share and the application of the estimated net
proceeds as well as an amendment to United Therapeutics' Certificate of
Incorporation to increase its authorized common stock to 100,000,000 shares.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion................... $ 313 $ 313
Stockholders' equity
Preferred stock, $.01 par value; 10,000,000 shares
authorized actual and as adjusted; no shares
outstanding, actual, and as adjusted................... -- --
Common stock, $.01 par value; 50,000,000 shares
authorized, 10,726,967 shares issued and outstanding,
actual; 100,000,000 shares authorized, 15,226,967
shares issued and outstanding, as adjusted(1).......... 107 152
Additional paid-in capital.................................. 43,364 109,129
Accumulated deficit......................................... (28,005) (28,005)
-------- --------
Total stockholders' equity................................ 15,468 81,278
-------- --------
Total capitalization................................. $ 15,781 $ 81,591
======== ========
</TABLE>

- ---------------
(1) Based on the number of shares outstanding on March 31, 1999. Excludes: (a)
1,174,458 shares issuable upon exercise of options and warrants outstanding
as of March 31, 1999 at a weighted average exercise price of $11.89 per
share and (b) 675,000 shares issuable pursuant to the underwriters'
over-allotment option. An additional 14,057,532 shares are available for
future issuances under the Amended and Restated Equity Incentive Plan. See
"Management -- Equity Incentive Plan."

15
<PAGE> 20

DILUTION

The net tangible book value of United Therapeutics as of March 31, 1999 was
$15.3 million, or $1.42 per share of common stock. Net tangible book value per
share represents the amount of total tangible assets less total liabilities
divided by the number of shares of common stock outstanding at that date. After
giving effect to the sale of the 4,500,000 shares of common stock being offered
hereby at an assumed initial public offering price of $16.00 per share, and
after deducting estimated underwriting discounts and commissions and estimated
offering expenses, the pro forma net tangible book value of United Therapeutics
as of March 31, 1999, would have been $81.1 million, or $5.32 per share. This
represents an immediate increase in pro forma net tangible book value of $3.90
per share to existing stockholders, and an immediate dilution of $10.68 per
share to new investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $16.00
Net tangible book value per share at March 31, 1999....... $1.42
Increase per share attributable to new investors.......... 3.90
-----
Pro forma net tangible book value per share after this
offering.................................................. 5.32
------
Dilution per share to new investors......................... $10.68
======
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1999,
the differences between the number of shares of common stock issued by United
Therapeutics, the total consideration paid and the average price per share paid
by existing stockholders and by the new investors purchasing shares in this
offering at an assumed initial public offering price of $16.00 per share:

<TABLE>
<CAPTION>
SHARES ISSUED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....... 10,726,967 70% $ 43,472,469 38% $ 4.05
New investors............... 4,500,000 30 72,000,000 62 16.00
---------- ---- ------------ ----
Total..................... 15,226,967 100% $115,472,469 100%
========== ==== ============ ====
</TABLE>

The foregoing discussion and tables assume no exercise of any outstanding
stock options or warrants. The discussion does not include: (a) 1,174,458 shares
issuable upon exercise of options and warrants outstanding as of March 31, 1999
at a weighted average exercise price of $11.89 or (b) 675,000 shares issuable at
an assumed price of $16.00 per share pursuant to the underwriters'
over-allotment option. An additional 14,057,532 shares are available for future
issuances under the Equity Incentive Plan. To the extent that any shares
reserved for issuance under the company's stock plan or the warrants are issued,
there will be further dilution to new investors.

16
<PAGE> 21

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with United Therapeutics' consolidated financial statements and
related notes included elsewhere in this prospectus and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus. The consolidated statement of operations data for
the period from June 26, 1996, the date of inception, through December 31, 1996
and for the years ended December 31, 1997 and 1998, and the consolidated balance
sheet data as of December 31, 1997 and 1998, are derived from the audited
consolidated financial statements which have been audited by KPMG LLP,
independent auditors, and are included elsewhere in this prospectus. The
consolidated balance sheet data as of December 31, 1996 are derived from audited
consolidated financial statements not included herein. The selected data
presented below for the three-month periods ended March 31, 1998 and 1999, and
as of March 31, 1999, are derived from the unaudited consolidated financial
statements included elsewhere in this prospectus. The historical results are not
necessarily indicative of results to be expected for future periods.

<TABLE>
<CAPTION>
PERIOD FROM
JUNE 26, 1996 YEAR ENDED THREE MONTHS ENDED
(INCEPTION) TO DECEMBER 31, MARCH 31,
DECEMBER 31, --------------------- ---------------------
1996 1997 1998 1998 1999
---------------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Revenue................................ $ 154 $ 116 $ 54 $ -- $ 54
Operating expenses:
Research and development............. 100 2,027 11,015 1,740 11,611
General and administrative........... 85 1,006 2,366 573 848
---------------- -------- -------- -------- --------
Total operating expense............ 185 3,033 13,381 2,313 12,459
---------------- -------- -------- -------- --------
Loss from operations................... (31) (2,917) (13,327) (2,313) (12,405)
Other income (expense):
Interest income...................... 1 135 510 52 178
Interest expense..................... -- (8) (15) -- (7)
Write-down of investment............. -- (111) -- -- --
---------------- -------- -------- -------- --------
Total other income, net............ 1 16 495 52 171
---------------- -------- -------- -------- --------
Net loss before income tax............. (30) (2,901) (12,832) (2,261) (12,234)
Income tax............................. -- -- (3) (3) (4)
---------------- -------- -------- -------- --------
Net loss............................... $ (30) $ (2,901) $(12,835) $ (2,264) $(12,238)
================ ======== ======== ======== ========
Basic and diluted net loss per
share(1)............................. $ (0.02) $ (0.87) $ (1.54) $ (0.38) $ (1.19)
================ ======== ======== ======== ========
Shares used in computing basic and
diluted net loss per share(1)........ 1,667 3,339 8,322 5,939 10,256
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------- MARCH 31,
1996 1997 1998 1999
--------- --------- --------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments.................................... $ 94 $ 5,018 $ 16,802 $ 15,429
Total assets..................................... 102 5,074 18,747 17,765
Note payable(2).................................. -- -- 314 313
Accumulated deficit.............................. (30) (2,931) (15,767) (28,005)
Total stockholders' equity....................... 70 4,617 16,676 15,468
</TABLE>

- ---------------
(1) See Note 2 of Notes to Consolidated Financial Statements for a description
of the computation of pro forma basic and diluted net loss per share.
(2) Includes current portion.

17
<PAGE> 22

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 elsewhere in this prospectus. The
following discussion contains forward-looking statements that reflect the plans
and estimated beliefs of management. 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 elsewhere in
this prospectus, particularly in "Risk Factors."

OVERVIEW

United Therapeutics develops pharmaceuticals to treat vascular diseases
including pulmonary hypertension and peripheral vascular disease, as well as
selected other chronic conditions. United Therapeutics commenced operations in
June 1996 and, since inception, has devoted substantially all of its resources
to its research and development programs. United Therapeutics has generated no
product revenues and has funded its operations primarily from the proceeds of
private placements of 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 drug
manufacturing and certain key aspects of clinical trials.

United Therapeutics has incurred net losses each year since inception and
had an accumulated deficit of $28.0 million at March 31, 1999. United
Therapeutics expects to continue to incur net losses and cannot assure investors
that, in the future, it will have 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 UT-15 and other products. It is
anticipated that $13.0 million in cash will be used during 1999 under these
agreements. These expenses will be funded from existing working capital.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998

Revenue for the three months ended March 31, 1999 was approximately
$54,000, as compared to zero for the corresponding period in 1998. This revenue
was earned under an "orphan drug" grant awarded by the FDA related to United
Therapeutics' development of UT-15. The FDA may designate a product as an
"orphan drug" if the drug is one intended to treat a rare disease or condition.

Research and development expenses consist primarily of costs to acquire
pharmaceutical products 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 $11.6 million for the three months ended March 31, 1999, as
compared to $1.7 million for the three months ended March 31, 1998. This
increase resulted almost entirely from the payment of an up-front licensing fee
consisting of common stock valued at $9.0 million and $100,000 in cash to obtain
the exclusive rights to develop beraprost, an oral form of prostacyclin, to
treat peripheral vascular disease in the United States and Canada. Research and
development expenses for the three months ended March 31, 1999 also reflect an
increased level of patient enrollment in United Therapeutics' Phase III clinical
trials of UT-15.

General and administrative expenses consist primarily of personnel
salaries, office expenses and professional fees. General and administrative
expenses were $848,000 for the three months ended March 31, 1999, as compared to
$573,000 for the three months ended March 31, 1998. This increase was due
primarily to increased staffing to support expanded operations.
18
<PAGE> 23

Interest income for the three months ended March 31, 1999 was $178,000, as
compared to $52,000 for the three months ended March 31, 1998. This increase was
attributable to an increase in the amount of cash available for investing
resulting from sales of common stock totaling approximately $20.5 million during
the last three quarters of 1998 and $2.0 million during the first quarter of
1999, less amounts used for operations during these periods.

YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997

Revenue for the year ended December 31, 1998 was approximately $54,000, as
compared to approximately $116,000 for the year ended December 31, 1997. The
1998 revenue was earned under an orphan drug grant awarded by the FDA. The 1997
revenue was earned under a contract relating to primary pulmonary hypertension
research.

Research and development expenses were $11.0 million for the year ended
December 31, 1998, as compared to $2.0 million for the year ended December 31,
1997. This increase resulted primarily from higher expenditures of approximately
$7.6 million in 1998 associated with the commencement of Phase III clinical
trials for United Therapeutics' lead product, UT-15. In addition, the company
paid up-front licensing fees approximating $2.0 million and consisting of common
stock, options, warrants and cash to obtain exclusive rights to develop
beraprost to treat pulmonary hypertension in the United States and Canada, and
UT-77 for all indications worldwide.

General and administrative expenses were $2.4 million for the year ended
December 31, 1998, as compared to $1.0 million for the year ended December 31,
1997. This increase was due primarily to the recruitment and hiring of
additional administrative personnel and increased legal and other professional
fees associated with license and patent activities and the expansion of United
Therapeutics' operations.

Interest income for the year ended December 31, 1998 was approximately
$510,000, as compared to approximately $135,000 for the year ended December 31,
1997. This increase was attributable to an increase in the amount of cash
available for investing resulting from $22.9 million in net proceeds from United
Therapeutics' private placements of common stock during 1998.

YEAR ENDED DECEMBER 31, 1997

For the year ended December 31, 1997, revenue from operations was
approximately $116,000 which was earned under a contract relating to primary
pulmonary hypertension research.

United Therapeutics' first full year of operations was 1997. Accordingly,
operating expenses for 1997 were significantly higher than in 1996. Operating
expenses for the year ended December 31, 1997 totaled $3.0 million, of which
$2.0 million was for research and development expenses and $1.0 million was for
general and administrative expenses.

Interest income for the year ended December 31, 1997 was approximately
$135,000.

PERIOD FROM INCEPTION (JUNE 26, 1996) TO DECEMBER 31, 1996

Revenue from operations from inception on June 26, 1996 to December 31,
1996 was approximately $154,000 which was earned under a contract relating to
primary pulmonary hypertension research. Operating expenses for this period
totaled $185,000 of which approximately $100,000 was for research and
development and approximately $85,000 was for general and administrative
expenses.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception in June 1996, United Therapeutics has financed its
operations principally through various private placements of common stock.
United Therapeutics' working capital at

19
<PAGE> 24

March 31, 1999 was $13.6 million, as compared with $15.1 million at December 31,
1998, and $4.6 million at December 31, 1997. Current liabilities at March 31,
1999 were $2.0 million, as compared with $1.8 million at December 31, 1998, and
$453,000 at December 31, 1997. United Therapeutics' debt at March 31, 1999 was
approximately $313,000, as compared with $314,000 at December 31, 1998, and
consisted of a note secured by United Therapeutics' building and due in monthly
installments over 25 years.

Net cash used in operating activities was approximately $3.0 million, $9.6
million, $2.3 million and zero for the three months ended March 31, 1999, years
ended December 31, 1998 and 1997 and the period ended December 31, 1996,
respectively. The increases resulted from the expansion of United Therapeutics'
operations. For the three months ended March 31, 1999, United Therapeutics
invested approximately $126,000 in cash for property, plant, and equipment. From
inception through December 31, 1998, United Therapeutics invested approximately
$1.1 million in cash for property, plant, and equipment. Net cash provided by
financing activities was approximately $1.8 million, $22.9 million, $7.4 million
and $100,000, for the three months ended March 31, 1999, years ended December
31, 1998 and 1997 and the period ended December 31, 1996, respectively. Cash
flows from financing activities were derived from private equity financings
during these periods.

United Therapeutics expects that the proceeds from its initial public
offering, together with its existing capital resources, will be adequate to fund
its operations through 2002. United Therapeutics' future capital requirements
and the adequacy of its available funds will depend on many factors, including:

- Regulatory approval of UT-15 and beraprost;

- Size and scope of its development efforts for additional products;

- Cost, timing and outcomes of regulatory reviews;

- Rate of technological advances;

- Determinations as to the commercial potential of United Therapeutics'
products under development;

- Status of competitive products;

- Defending and enforcing intellectual property rights;

- Establishment, continuation or termination of third-party manufacturing
arrangements;

- Development of sales and marketing resources or the establishment,
continuation or termination of third-party manufacturing 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

- Availability of other financing opportunities.

As of December 31, 1998, United Therapeutics had available approximately
$11.0 million in net operating loss carryforwards and $3.6 million in business
tax credit carryforwards for federal income tax purposes which expire at various
dates through 2018. As of March 31, 1999, United Therapeutics had available
approximately $22.4 million in net operating loss carryforwards and $4.3 million
in business tax credit carryforwards. As a result of past financings and the
initial

20
<PAGE> 25

public offering, United Therapeutics has not experienced and will not experience
ownership changes as defined by rules enacted with the Tax Reform Act of 1986
that would limit United Therapeutics' ability to use its net operating loss and
tax credit carryforwards.

YEAR 2000 READINESS DISCLOSURE STATEMENT

United Therapeutics uses a number of computer software programs and
operating systems in its internal operations, including applications used in
financial business systems and various administrative functions. To the extent
that these software applications, and the software applications of United
Therapeutics' vendors, suppliers, financial institutions and service providers,
contain source code that is unable to appropriately interpret the upcoming
calendar year 2000, some level of modification or even possibly replacement of
such source code or applications will be necessary.

United Therapeutics has identified the software applications that are not
Year 2000 compliant. United Therapeutics anticipates its Year 2000 remediation
efforts will be completed in the third quarter of 1999 and expects to incur
expenses of up to $100,000 to complete its remediation efforts.

United Therapeutics has contacted all of its major vendors, suppliers,
financial institutions and service providers to ensure they are Year 2000
compliant. Key third party vendors have been asked to certify in writing that
their software or systems are Year 2000 compliant. United Therapeutics has
confirmed with MiniMed that the microinfusion devices used to deliver its key
drug, UT-15, to patients have been tested and are Year 2000 compliant.

United Therapeutics believes its worst case scenario relating to Year 2000
risks includes a power interruption and a lack of pharmaceutical products to
support clinical trials. United Therapeutics is implementing a contingency plan
to cover this situation by building up inventories of its drug products to
sustain its studies for 12 months and has purchased a generator to deal with
power failures.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." United Therapeutics is required to adopt
SFAS No. 133 for the year ending December 31, 2000. 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 is not expected to
have a material impact on United Therapeutics' financial condition or results of
operations.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position, or "SOP," 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires
that entities capitalize certain costs related to internal-use software once
certain criteria have been met. United Therapeutics is required to implement SOP
98-1 for the year ending December 31, 1999. Adoption of SOP 98-1 is not expected
to have a material impact on United Therapeutics' financial condition or results
of operations.

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<PAGE> 26

BUSINESS

This prospectus contains forward-looking statements that involve risks and
uncertainties. United Therapeutics' actual results may differ significantly from
the results discussed in these forward-looking statements. Factors that may
cause such a difference include, but are not limited to, those discussed in
"Risk Factors."

OVERVIEW

United Therapeutics develops pharmaceuticals to treat vascular diseases,
including pulmonary hypertension and peripheral vascular disease, as well as
selected other chronic conditions. Both pulmonary hypertension and peripheral
vascular disease are characterized by reduced production of natural
prostacyclin, a highly unstable molecule with powerful effects on blood-vessel
health. United Therapeutics' lead products, UT-15 and beraprost, are stable
synthetic forms of prostacyclin. UT-15 is delivered subcutaneously and is
currently in two multi-center Phase III clinical trials for treating advanced
pulmonary hypertension. Beraprost is delivered orally, and United Therapeutics
is beginning a Phase III clinical trial program to treat early-stage peripheral
vascular disease.

In October 1998, United Therapeutics completed a 26-patient, eight-week
clinical trial for UT-15 in primary pulmonary hypertension patients. In this
trial, patients were randomly selected to receive either UT-15 or a
non-therapeutic saline solution, known as a placebo. This trial was a
"double-blind" study, meaning neither the patients nor the investigators in the
trial were informed during the trial as to which patients were receiving UT-15
or the placebo. Results from this trial demonstrated that UT-15 can be safely
administered to severely ill patients on an out-patient basis and also showed
that continuous, subcutaneous dosing of UT-15 leads to improvements in pulmonary
blood pressure and exercise ability. Patients receiving UT-15 in this study
experienced improvements similar to those achieved by patients receiving Flolan
therapy for 12 weeks. Flolan was approved by the FDA in 1995 to treat primary
pulmonary hypertension, a small subset of advanced pulmonary hypertension. Each
patient who finished this study elected to receive UT-15 therapy indefinitely.

United Therapeutics is undertaking additional clinical studies. UT-15 is in
Phase II clinical trials for treating late-stage peripheral vascular disease,
and United Therapeutics is beginning a Phase II clinical trial program for
beraprost to treat early-stage pulmonary hypertension. United Therapeutics
believes that beraprost's current oral formulation will be a complementary
product to UT-15 because this formulation cannot provide the constant
therapeutic levels of prostacyclin in the body necessary to treat advanced
pulmonary hypertension and late-stage peripheral vascular disease effectively.
United Therapeutics is also beginning a Phase II clinical trial program for
UT-77, an elastase inhibitor, for the treatment of chronic obstructive pulmonary
disease. Finally, United Therapeutics is beginning a Phase II/III clinical trial
program for Ketotop, a patch that delivers the FDA-approved anti-inflammatory
pain reliever ketoprofen, for the treatment of osteoarthritis.

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<PAGE> 27

BACKGROUND

VASCULAR DISEASE AND PROSTACYCLIN

Many vascular diseases are characterized by the degradation of the
blood-vessel wall lining, the aggregation of platelets and the disruption of
smooth muscle cell function. These conditions cause blockages and affect the
ability of the blood vessels to dilate and then constrict as blood flows through
the circulatory system.

Prostacyclin is an important molecule that is produced by the body and has
powerful effects on blood-vessel health and function. Natural prostacyclin is
inherently unstable, with the period of time it remains in the body before
breaking down, known as the "half life," of under six minutes. It appears to act
in three key ways to keep blood vessels functioning properly:

- It dilates blood vessels, where necessary, enabling smooth blood flow;

- It prevents platelet aggregation; and

- It prevents proliferation of smooth muscle cells surrounding the vessels,
which otherwise would constrict the vessels and obstruct blood flow.

PULMONARY HYPERTENSION

Pulmonary hypertension is a progressive, life-threatening vascular disease
that is difficult to diagnose and treat and is currently incurable. It is
characterized by high pressure in the blood vessels between the heart and lungs,
known as the pulmonary blood vessels, but normal blood pressure in the rest of
the body. The high pressure is due to the narrowing of pulmonary blood vessels
caused primarily by reduced production of prostacyclin in the affected blood
vessels. This elevated pulmonary blood pressure causes increasing strain on the
right side of the heart as it tries to pump blood to the lungs. Patients with
early-stage pulmonary hypertension may be unaware they have the disease. As the
disease progresses, however, patients suffer breathlessness and fainting spells
and are increasingly unable to carry out normal daily activities. Patients with
untreated advanced pulmonary hypertension become bed-ridden and die, usually of
right-heart failure. According to statistics compiled by the National Institutes
of Health before the introduction of Flolan in 1995, the mean survival period
for a patient with primary pulmonary hypertension was approximately 30 months
from diagnosis. Survival of patients using Flolan appears to be markedly
increased. The five-year survival rate of children using Flolan is 92%.

Traditionally, physicians have thought of pulmonary hypertension as
consisting of two diseases: primary pulmonary hypertension and secondary
pulmonary hypertension. Primary pulmonary hypertension has been defined as
pulmonary hypertension with no identified specific cause. Secondary pulmonary
hypertension has been defined as pulmonary hypertension with a known cause such
as heart, lung or liver dysfunction or the connective tissue disease,
scleroderma. Currently, several thousand people in North America and Europe have
been diagnosed with primary pulmonary hypertension, while over 50,000 people in
North America and Europe have advanced secondary pulmonary hypertension. Primary
pulmonary hypertension and advanced secondary pulmonary hypertension appear to
be amenable to prostacyclin therapy. In its 1998 world symposium on primary
pulmonary hypertension, The World Health Organization proposed a new combined
classification -- pulmonary hypertension -- to recognize the similarity between
primary pulmonary hypertension and secondary pulmonary hypertension. The new
classification also includes pulmonary hypertension linked to the use of
Redux(R) or phen-fen diet drugs, HIV infection and genetic predisposition to the
disease. In addition, according to a 1989 report published in Chest, the
official publication of the American College of Chest Physicians, the prevalence
of pulmonary hypertension in the U.S. male population is between 8% and 13% for
men between the ages of 35 and 44, depending on severity. It is also reported
that the prevalence of mild pulmonary hypertension in men age 65 and older
exceeds 20%.

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<PAGE> 28

Current Treatments

Flolan. The FDA has approved only one drug treatment for primary pulmonary
hypertension and no drug treatments for secondary pulmonary hypertension. The
approved drug treatment is Flolan, a continuous intravenous infusion of
prostacyclin, marketed by Glaxo Wellcome Inc. in the United States since 1995.
Flolan has also been approved for the treatment of primary pulmonary
hypertension in France and Switzerland. Prior to Flolan's approval in the United
States for primary pulmonary hypertension, physicians often treated pulmonary
hypertension with off-label use of other drugs such as calcium channel blockers
and anticoagulants. In certain circumstances, these are still used off-label to
treat pulmonary hypertension. The FDA approved Flolan based on results from
Glaxo Wellcome's pivotal Phase III trial, in which Flolan proved to be an
effective treatment for patients with primary pulmonary hypertension. Patients
who were treated with Flolan experienced clinical benefits during the 12-week
study, such as increased survival and exercise ability. In contrast, patients
who were not treated with Flolan because they were in the control group
experienced a worsening of their condition. Of the 40 patients in the control
group, eight died during the study, while no patients treated with Flolan died.
Although Flolan is not an approved treatment for secondary pulmonary
hypertension, a study published in the Annals of Internal Medicine in May 1999
concluded that intravenous prostacyclin may be an effective therapy for
secondary pulmonary hypertension. In this study, intravenous prostacyclin
therapy resulted in significant improvement in patients' exercise ability.
Additionally, a study of scleroderma patients presented at the November 1998
American Heart Association meeting reported that Flolan appears to be a safe and
effective treatment for advanced secondary pulmonary hypertension.

Flolan's active component, prostacyclin, dilates blood vessels, prevents
platelet aggregation and prevents proliferation of smooth muscle cells
surrounding blood vessels. The half life of Flolan in the body, however, is
under six minutes.

Although Flolan extends the lives of patients with primary pulmonary
hypertension, there are a number of significant drawbacks associated with Flolan
treatment:

- Because of its short half life and unstable nature, Flolan must be
delivered continuously by an external pump through an intravenous
catheter surgically implanted in the patient's chest;

- Because of Flolan's short half life, patients risk abrupt recurrence of
hypertension, called rebound hypertension, and death in the event Flolan
delivery is interrupted for even a short period of time;

- Because of Flolan's highly unstable nature, patients must prepare a
mixture of Flolan under completely sterile conditions one or more times a
day;

- Patients experience frequent infections, including life-threatening
sepsis, from the catheter or from mixing the drug under unsterile
conditions;

- Because of its highly unstable nature, Flolan should always remain
refrigerated, even during administration;

- To be mobile, patients must wear or carry a pack containing the pump and
ice; and

- Patients should not swim, shower or otherwise immerse themselves in water
because of the infection risks caused by the permanent intravenous
catheter.

Because of these safety and quality-of-life drawbacks, physicians typically
prescribe Flolan for only those approximately 2,000 patients with the most
advanced stages of pulmonary hypertension. United Therapeutics believes that
other patients who could benefit from Flolan therapy are not using Flolan
because they live in countries where Flolan is unavailable or they

24
<PAGE> 29

are diagnosed with forms of pulmonary hypertension for which Flolan is not
approved and thus the costs of Flolan therapy are generally not reimbursed by
third-party payors.

Transplants. Besides Flolan, the only other treatment for advanced
pulmonary hypertension is a lung or heart-lung transplant. There are significant
drawbacks associated with transplants, including the following:

- Patients often die before suitable donor organs become available;

- Less than 20% of heart-lung transplant patients survive for 10 years;

- Post-operative complications can result in organ rejection, requiring
another transplant if organs are available; and

- Transplant patients require life-long immuno-suppressant drug therapy
that entails life-threatening side effects, including vulnerability to
serious infections and diseases such as cancer and insulin-dependent
diabetes.

Market Size

United Therapeutics believes that the potential market for a
non-intravenous form of prostacyclin such as UT-15 to treat advanced pulmonary
hypertension exceeds $2.5 billion based on the current cost of Flolan therapy
and the estimated number of advanced pulmonary hypertension patients as reported
in medical journals. There are an estimated 55,000 people suffering from
advanced pulmonary hypertension in North America and Europe. According to the
Journal of Pharmacy Systems Reports, the annual cost of Flolan therapy in the
United States, including the necessary supplies and pumps, is in excess of
$57,000 per patient. There are only approximately 2,000 advanced pulmonary
hypertension patients receiving Flolan therapy, representing a current market of
over $110 million in the aggregate. In addition, Flolan patients may incur
substantial annual hospitalization and other costs related to the surgically
implanted catheter. The costs associated with Flolan therapy are reimbursable by
third-party payors, including Medicare. In addition to UT-15, which United
Therapeutics is developing to treat patients with advanced pulmonary
hypertension. United Therapeutics believes that its oral form of prostacyclin
therapy, beraprost, may provide an opportunity to treat millions of patients
with early-stage pulmonary hypertension.

PERIPHERAL VASCULAR DISEASE

When vascular disease affects the blood vessels in the legs, it is referred
to as peripheral vascular disease. While the precise cause of peripheral
vascular disease is unknown, diabetes, obesity, smoking and lack of exercise are
associated with the disease. In the early stages of the disease, the patient is
at first free of symptoms and then experiences mild to severe pain while
walking. As the disease progresses, the patient experiences leg pain while at
rest and suffers from delayed wound healing which sometimes leads to ulcers,
gangrene and amputation. The mean survival period of the late-stage peripheral
vascular disease patient is six years.

Peripheral vascular disease affects approximately six million people in the
United States, and United Therapeutics believes that a similar number of people
are affected by the disease in Europe. Additionally, there are approximately
350,000 new diagnoses of peripheral vascular disease annually in the United
States and 650,000 new diagnoses of peripheral vascular disease annually in
Europe.

Current Treatments

Treatment for peripheral vascular disease depends upon the disease stage.
In the early stages, physicians treat the disease primarily by recommending
lifestyle changes such as special diet and regular exercise programs. If these
changes are not effective in halting the progress of the

25
<PAGE> 30

disease, physicians sometimes prescribe drug treatment. The progression of the
disease frequently results in repeated surgeries or other interventions,
including angioplasty to unblock the arteries of the leg, arterial grafts to
bypass the blocked arteries and insertion of stents to prevent the arteries from
collapsing. If these procedures are ineffective, amputations are often required.
The FDA has approved only two drugs for peripheral vascular disease,
pentoxifylline and cilostazol. Pentoxifylline improves the flow properties of
the red blood cells, and cilostazol reduces the stickiness of blood platelets.
Cilostazol should not be prescribed for patients with certain cardiovascular
complications, including those that commonly occur in patients with peripheral
vascular disease. The company believes that neither of these drugs provide all
the benefits of UT-15 or beraprost.

Market Size

Surgeons currently perform approximately 200,000 amputations each year in
the United States and Europe on late-stage peripheral vascular disease patients.
Additionally, 300,000 non-amputation surgical procedures are performed in the
United States each year and, the company believes a similar number are performed
each year in Europe. Based on an average cost of $16,000 per amputation and of
$15,000 per angioplasty, there is in excess of $12 billion spent each year on
surgeries related to peripheral vascular disease in the United States and
Europe. United Therapeutics is evaluating how much of this market can be
addressed by prostacyclin therapy. The company expects that many amputations may
be avoided and, when prostacyclin therapy is used in conjunction with the other
surgical procedures, repeat surgical procedures may be reduced.

CHRONIC OBSTRUCTIVE PULMONARY DISEASE

Chronic obstructive pulmonary disease is a serious and potentially
life-threatening inflammation of the lungs characterized by chronic obstruction
of airflow. The two principal subsets of chronic obstructive pulmonary disease
are emphysema and chronic bronchitis.

Emphysema

Approximately two million people in the United States, and the company
believes a similar number in Europe, suffer from emphysema, which is a disease
affecting the small airways of the lung. Emphysema may be hereditary or caused
by smoking or environmental toxins. Patients with emphysema experience shortness
of breath, labored breathing, excessive and chronic coughing and production of
excessive sputum. In healthy lungs, two proteins act in harmony to keep the
lungs clear and functional. The first protein, elastase, is carried by the
body's white blood cells and protects the lungs by killing bacteria and
neutralizing inhaled particles. Once these beneficial effects are achieved, the
second protein -- alpha-1 antitrypsin -- neutralizes elastase, which, if left to
act unchecked, destroys lung tissue. In patients with emphysema, the alpha-1
antitrypsin levels are greatly reduced, which allows elastase to damage the
elastic fibers of the lungs, rendering the lungs unable to expand and contract
as with normal breathing. In most cases, this damage is permanent and
irreversible.

Chronic Bronchitis

Approximately 14 million people in the United States, and the company
believes a similar number in Europe, suffer from chronic bronchitis, which is a
disease affecting the large airways of the lungs. Chronic bronchitis is an
inflammation of the bronchi which can be caused by smoking, environmental toxins
or bacterial infections. Patients with chronic bronchitis, like emphysema
patients, experience shortness of breath, labored breathing, excessive and
chronic coughing and production of excessive sputum.

26
<PAGE> 31

Current Treatments

Current management of chronic obstructive pulmonary disease is based on the
degree of the respiratory obstruction and the extent of the patient's
disability. Prolastin(R) is the only FDA-approved drug specifically for the 5%
of chronic obstructive pulmonary disease patients with an inherited deficiency
of alpha-1 antitrypsin. Prolastin is difficult to manufacture and is not
available in sufficient quantities to support this subset of emphysema patients.
A lung transplant is the treatment of last resort for late-stage emphysema
patients. There is no treatment currently available to restore lung elasticity
and thus reverse the progression of emphysema.

With respect to chronic bronchitis, early in the disease process physicians
prescribe bronchodilators, which act to open airways in the lungs, including
Combivent(R) and Atrovent(R) inhalation aerosols. Theophylline and albuterol are
frequently prescribed to produce dilation of bronchioles for both emphysema and
chronic bronchitis. Finally, physicians have used intermittent positive pressure
breathing devices and continuous oxygen therapy when other agents have failed.
For patients with the most advanced stages of emphysema, the only treatment is a
lung transplant.

Market Size

There were 97,000 deaths in the United States in 1995 attributable to
chronic obstructive pulmonary disease, the country's fourth leading cause of
death. There are approximately 500,000 hospitalizations annually due to chronic
bronchitis.

STRATEGY

Capitalize on United Therapeutics' Experience and Expertise in Pulmonary
Vascular Medicine. United Therapeutics believes that it has assembled the
preeminent group of scientists and clinicians in the field of pulmonary vascular
medicine. Members of United Therapeutics' scientific advisory board have won the
Nobel Prize for the discovery and characterization of prostacyclin, discovered
Flolan and invented UT-15. Members of United Therapeutics' senior management led
the team at Burroughs Wellcome Co. that designed the clinical trials for,
obtained FDA approval of and commercialized Flolan. These executives have
similarly designed UT-15's clinical trials, which have primary end points
identical to those used for the studies to approve Flolan. United Therapeutics
believes this expertise will be instrumental in the development and
commercialization of UT-15, beraprost and its other products.

Establish United Therapeutics' Prostacyclin Products as the Standard of
Care for Pulmonary Hypertension and Peripheral Vascular Disease. United
Therapeutics is seeking to establish UT-15 and beraprost, its stable analogs of
prostacyclin, as the worldwide standards of care for the treatment of pulmonary
hypertension and peripheral vascular disease. Currently, United Therapeutics is
conducting two multi-center pivotal Phase III clinical trials of UT-15 for
advanced pulmonary hypertension and a Phase II trial of UT-15 for late-stage
peripheral vascular disease. United Therapeutics is also beginning a
multi-center Phase III clinical trial program for beraprost to treat early-stage
peripheral vascular disease and a Phase II clinical trial program for beraprost
to treat early-stage pulmonary hypertension. United Therapeutics believes that
its influential scientific advisory board, strong network of clinical
investigators and experienced management team can demonstrate and communicate to
physicians the benefits of treating pulmonary hypertension and peripheral
vascular disease patients with United Therapeutics' stable synthetic forms of
prostacyclin following their approval.

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<PAGE> 32

Minimize Fixed Costs and Corporate Overhead Through Outsourcing and
Partnering. United Therapeutics maintains a streamlined corporate infrastructure
that is focused on strategic business management. United Therapeutics contracts
with FDA-approved manufacturers for the synthesis and manufacture of its
products and with established drug sales organizations for marketing and
distribution of its products. United Therapeutics has partnered with MiniMed
Inc., the worldwide leader in subcutaneous continuous-flow microinfusion device
systems, to design, develop and implement the delivery of UT-15 therapies for
pulmonary hypertension using MiniMed products. By outsourcing the non-core
aspects of its business, United Therapeutics believes that it will substantially
reduce fixed overhead and capital investment, accelerate commercialization of
its products and reduce its business risk.

Obtain Licenses for, Develop and Commercialize Selected Other Product
Candidates. United Therapeutics intends to continue to license and develop
product candidates that:

- have positive human safety and efficacy data;

- address a chronic condition with currently inadequate or high-cost
treatment options; and

- address a condition with little existing or potential treatment
competition.

Accordingly, United Therapeutics has obtained licenses for UT-77 and Ketotop.
The company is developing UT-77, which appears to prevent elastase from
destroying lung tissue, for the treatment of chronic obstructive pulmonary
disease. United Therapeutics is beginning a Phase II clinical trial program for
UT-77. United Therapeutics is also beginning a Phase II/III clinical trial
program for Ketotop, a unique transdermal delivery system for the FDA-approved
anti-inflammatory pain reliever, ketoprofen. Ketotop is currently being sold by
others in several countries outside the United States.

UNITED THERAPEUTICS' PRODUCTS

The following table summarizes United Therapeutics' potential product
portfolio.

<TABLE>
<CAPTION>
PRODUCT MODE OF DELIVERY INDICATION CLINICAL TRIAL STATUS UT TERRITORY
- ---------- ---------------- --------------------- ----------------------- -------------
<S> <C> <C> <C> <C>
UT-15 Subcutaneous Advanced pulmonary Phase III Worldwide
hypertension
UT-15 Subcutaneous Late-stage peripheral Phase II Worldwide
vascular disease
Beraprost Oral Early-stage Beginning Phase III U.S./Canada
peripheral
vascular disease
Beraprost Oral Early-stage pulmonary Beginning Phase II U.S./Canada
hypertension
UT-77 Inhalation Chronic obstructive Beginning Phase II Worldwide
pulmonary disease
Ketotop Transdermal Osteoarthritis Beginning Phase II/III North America
</TABLE>

UT-15

In December 1996 and January 1997, United Therapeutics obtained worldwide
rights to UT-15 for all indications from Glaxo Wellcome and Pharmacia & Upjohn.

Pulmonary Hypertension

United Therapeutics has focused primarily on developing UT-15 as its lead
product for treating advanced pulmonary hypertension. UT-15 is a significantly
more stable form of

28
<PAGE> 33

prostacyclin than Flolan, and United Therapeutics believes that it will provide
patients with a convenient and non-intravenous life-long prostacyclin therapy.
In contrast to Flolan, UT-15 is stable at room temperature for up to five years
and has a half life in the human body of approximately 45 minutes. These
attributes allow for a safer and more convenient delivery of UT-15 to patients.
Specifically, UT-15 does not need to be administered by a refrigerated, bulky
pump through a surgically implanted catheter. Instead, UT-15 is delivered by
subcutaneous infusion with a pager-sized MiniMed microinfusion device, the same
type of reliable device that has been used to deliver insulin to over 60,000
diabetics. Subcutaneous delivery of UT-15 also eliminates the risk of sepsis
infection and related hospitalization associated with the Flolan catheter.
UT-15's extended half life also greatly reduces the risk of death from
life-threatening rebound hypertension in cases of treatment interruption. The
stability of UT-15 also allows it to be prepackaged, thus eliminating the need
to reconstitute the drug one or more times daily under completely sterile
conditions, as is the case with Flolan.

The primary differences between the Flolan therapy and the UT-15 therapy
are summarized in the following table.

<TABLE>
<CAPTION>
CHARACTERISTIC FLOLAN UT-15
- ------------------------------------------------------------ ----------- ------------
<S> <C> <C>
Delivery of drug Intravenous Subcutaneous
Surgical implant of catheter Yes No
Constant refrigeration Yes No
Sterile conditions for frequent drug constitution required Yes No
Risk of rebound hypertension High Low
Risk of serious infections, including sepsis High Low
Bulky pack for pump Yes No
Swimming and showers prohibited Yes No
</TABLE>

UT-15 is currently in pivotal Phase III clinical trials for advanced
pulmonary hypertension. In earlier clinical trials, United Therapeutics
demonstrated that UT-15, delivered in a brief intravenous infusion, has similar
effects on primary pulmonary hypertension patients as does a comparable infusion
of Flolan. United Therapeutics then demonstrated that UT-15, delivered in a
brief subcutaneous infusion to primary pulmonary hypertension patients, had
similar effects as when delivered intravenously. Recently, United Therapeutics
studied 26 primary pulmonary hypertension patients in a randomized,
double-blind, placebo-controlled, eight-week trial that concluded:

- UT-15 can be safely administered to severely ill patients on an
outpatient basis;

- Continuous dosing of UT-15 leads to improvement in pulmonary blood
pressure and exercise ability; and

- These improvements are similar to improvements observed with Flolan
administered for 12 weeks.

Each patient who finished this study in October 1998 elected to receive
UT-15 therapy indefinitely.

United Therapeutics is now enrolling 224 advanced pulmonary hypertension
patients, without distinction between primary and secondary pulmonary
hypertension, in each of two pivotal Phase III trials of UT-15 at approximately
40 select medical centers. The main objective of the trials is to determine the
impact of continuous subcutaneous UT-15 therapy on exercise ability after 12
weeks of therapy. The primary endpoints for these trials are identical to those
in

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<PAGE> 34

the studies to approve Flolan. Secondary objectives include assessing the impact
of UT-15 on the symptoms of advanced pulmonary hypertension.

Peripheral Vascular Disease

United Therapeutics is also developing UT-15 for late-stage peripheral
vascular disease. Peripheral vascular disease appears to be similar to pulmonary
hypertension in that there is a reduction in natural prostacyclin in the
affected blood vessels. In September 1998, United Therapeutics completed a Phase
II study which assessed the safety and blood flow effects of UT-15 administered
intravenously to patients with late-stage peripheral vascular disease. The study
demonstrated that UT-15 can be administered safely to patients with late-stage
peripheral vascular disease and substantially increased blood flow in the
affected areas of the legs. United Therapeutics will next undertake a
pre-pivotal study to optimize dosing levels of UT-15 for pivotal Phase III
trials. Other studies by independent clinical investigators have shown that
Flolan provides therapeutic benefit to patients with early- and late-stage
peripheral vascular disease.

BERAPROST

In September 1998, United Therapeutics obtained an exclusive license from
Toray Industries, Inc. for beraprost for the treatment of pulmonary hypertension
in the United States and Canada. In March 1999, United Therapeutics obtained an
additional exclusive license from Toray for beraprost for the treatment of
peripheral vascular disease in the United States and Canada. Beraprost is an
oral form of prostacyclin that is chemically stable and has a half life in the
body of approximately one hour. Like natural prostacyclin and UT-15, beraprost
dilates blood vessels, prevents platelet aggregation and prevents proliferation
of smooth muscle cells surrounding blood vessels. United Therapeutics believes
that beraprost may be an important treatment for early-stage peripheral vascular
disease and for early-stage pulmonary hypertension. Intermittent oral doses of
beraprost do not, however, provide consistent levels of the drug in the blood
necessary to treat advanced stages of these diseases. Consequently, United
Therapeutics believes that UT-15 will be the more effective treatment for the
late stages of these diseases.

Beraprost has proven to be safe and effective for the treatment of
peripheral vascular disease in clinical studies conducted outside the United
States and has been approved for treatment of peripheral vascular disease in
Japan since 1994. Sales in Japan of beraprost by Toray and its licensees were
over $225 million in 1998. Toray has licensed to Hoechst Marion Roussel, Inc.
rights to beraprost in Europe. Hoechst has conducted extensive clinical research
with beraprost, including a controlled study in patients suffering from
intermittent leg pain due to blood vessel blockages. This study shows that
beraprost is effective in treating patients with early-stage peripheral vascular
disease, and Hoechst has filed for approval of beraprost for the treatment of
peripheral vascular disease in Europe. A recent Japanese study presented at the
1998 American Heart Association meeting suggests that beraprost may improve
survival in patients with pulmonary hypertension as well. In that study, 21 of
the 24 patients using beraprost survived during the four year study period, as
compared to eight of the 34 patients not using beraprost. United Therapeutics is
beginning a Phase III clinical trial program for beraprost to treat early-stage
peripheral vascular disease and Phase II clinical trial program for beraprost to
treat early-stage pulmonary hypertension.

UT-77

In November 1998, United Therapeutics acquired from Cortech, Inc. exclusive
worldwide rights to develop and market UT-77 for all indications, except the
treatment of skin conditions. United Therapeutics believes that UT-77 is the
only potential new chemical entity or drug in Phase II or later clinical trials
for preventing elastase from destroying the lung tissue of patients with chronic
obstructive pulmonary disease. United Therapeutics intends to develop UT-77 for
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delivery by both injection and inhalation. The company is beginning a
multi-center Phase II study to assess the effectiveness of UT-77 in improving
breathing of patients suffering from periodic life-threatening episodes
associated with chronic obstructive pulmonary disease. Cortech conducted
extensive pre-clinical and clinical studies of UT-77 that showed continuous
intravenous infusion of UT-77 inhibits elastase overproduction and enhances lung
function in chronic obstructive pulmonary disease patients. Prior to United
Therapeutics' license from Cortech, clinical investigators in U.S. medical
centers conducted Phase I and Phase II studies involving 40 patients that showed
UT-77 to be safely tolerated as a continuous intravenous infusion therapy. These
studies also showed that the drug affected the levels of certain proteins in the
body that are involved in several respiratory diseases. United Therapeutics
believes that these results provide a reasonable basis for further development
of UT-77 as a treatment for chronic obstructive pulmonary disease.

KETOTOP

In July 1998, United Therapeutics began collaborating with Global Medical
Enterprises Ltd. and Global Medical Enterprises Ltd., LLC to develop Ketotop,
and in February 1999, United Therapeutics obtained the exclusive rights from
Global Medical to develop Ketotop for marketing in North America and Central
America. Ketotop is a unique, transdermal drug delivery system which contains
ketoprofen, an FDA-approved oral pain reliever that has strong anti-inflammatory
properties. United Therapeutics plans to market Ketotop to relieve
osteoarthritis and other musculo-skeletal pain. Osteoarthritis is a disease that
afflicts nearly 21 million people in the United States, including 13.7 million
with osteoarthritis of the knee. Although highly effective, ketoprofen in pill
form frequently produces gastric irritation. To address this problem, Ketotop
uses a unique matrix technology to provide ketoprofen transdermally, through the
skin using a patch, in concentrated doses specifically to targeted sites for a
sustained period of 12 to 14 hours. United Therapeutics believes that this
delivery system, which is patented in the United States, is the most effective
way to deliver pain relief through the skin. United Therapeutics is beginning
Phase II/III studies to demonstrate that Ketotop is safe and effective for the
treatment of osteoarthritis.

TELEMEDICINE SERVICES

Pulmonary hypertension patients require periodic monitoring of certain
bodily measurements such as heart and lung function. Much of this monitoring can
be achieved with less expense and inconvenience by using telemedicine devices
that enable physicians to monitor patients remotely. United Therapeutics intends
to provide telemedicine services for a fee to patients and physicians using and
prescribing United Therapeutics' products. United Therapeutics also intends to
utilize its experience with pulmonary hypertension telemedicine to explore the
development of similar internet-based services for other chronic diseases.

THE MINIMED STRATEGIC ALLIANCE

MiniMed Inc. is a world leader in the design, development, manufacturing
and marketing of advanced infusion systems for the delivery of drugs. The
pager-sized microinfusion device which MiniMed has agreed to provide United
Therapeutics to deliver UT-15 by continuous, subcutaneous infusion is a system
substantially similar to the system which has been successfully marketed to over
60,000 diabetics for insulin delivery.

United Therapeutics entered into an agreement with MiniMed in September
1997 to collaborate in the design, development and implementation of therapies
to treat pulmonary hypertension utilizing MiniMed products and UT-15. The term
of the agreement is for seven years after the FDA grants a new drug approval for
UT-15 and will be automatically extended for additional 12-month periods unless
otherwise terminated. The agreement is subject to early termination in the event
of a material breach or bankruptcy of either party. United Therapeutics

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and MiniMed have established a Management Committee comprised of two
representatives from each company to implement the agreement. MiniMed will:

- Establish a dedicated sales force for UT-15 for advanced pulmonary
hypertension;

- Take responsibility for the marketing and sales of UT-15 to physicians
who treat pulmonary hypertension;

- Train patients and care providers in the use of the MiniMed device with
UT-15;

- Provide the MiniMed device, related supplies and customer service;

- Obtain third-party payor reimbursement approvals; and

- Assist patients with third-party payor reimbursement.

United Therapeutics has agreed to pay MiniMed the greater of a percentage
of the revenues derived from commercial sales of UT-15 or $5,000 per patient per
year. In the event that there are any discoveries or improvements arising out of
work performed under the agreement, the parties will have joint ownership of
those discoveries or improvements.

PATENTS AND PROPRIETARY RIGHTS

United Therapeutics' success will depend in part on its ability to obtain
and maintain patent protection for its products, preserve trade secrets, prevent
third parties from infringing upon its proprietary rights and operate without
infringing upon the proprietary rights of others, both in the United States and
internationally.

GLAXO WELLCOME ASSIGNMENT

In January 1997, Glaxo Wellcome Inc. assigned to United Therapeutics
patents and patent applications for the use of the stable prostacyclin analog
now known as UT-15 for the treatment of pulmonary hypertension and congestive
heart failure. Glaxo Wellcome has a right to negotiate a license from United
Therapeutics if United Therapeutics decides to license any part of the marketing
rights to a third party. Glaxo Wellcome waived this right with respect to the
agreement with MiniMed. Under the agreement, Glaxo Wellcome is entitled to
certain royalties from United Therapeutics for a period of 10 years from the
date of the first commercial sale of any product containing UT-15. If United
Therapeutics grants to a third party any license to UT-15, Glaxo Wellcome is
also entitled to a percentage of all consideration payable to United
Therapeutics by such licensee.

For pulmonary hypertension, the patent does not expire in the United States
until October 2009 and until various dates from September 2009 to August 2013 in
nine other countries. For congestive heart failure, the patent does not expire
until May 2011 in the United States and from May 2011 to March 2012 in five
other countries. United Therapeutics is responsible for all patent prosecution
and maintenance for the UT-15 patent portfolio.

PHARMACIA & UPJOHN LICENSE

In December 1996, Pharmacia & Upjohn Company exclusively licensed to United
Therapeutics patents and a patent application for the composition and production
of the stable prostacyclin analog now known as UT-15. United Therapeutics filed
a U.S. patent application for a new synthesis and production method for UT-15 in
October 1997. United Therapeutics believes that its method is a substantial
improvement over the Pharmacia & Upjohn method. United Therapeutics intends to
use its improved and unique synthesis method rather than the licensed Pharmacia
& Upjohn method for the actual production of the UT-15 product.

Under the Pharmacia & Upjohn agreement, United Therapeutics paid an initial
license fee and must make additional milestone payments for orphan and
non-orphan indications of the
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compound of up to $3,875,000. United Therapeutics will make royalty payments
between 2.5% and 5% of net sales, subject to reduction based on required royalty
payments to Glaxo Wellcome, to Pharmacia & Upjohn until the later of the
expiration of the applicable patent or 10 years after the date of the first
commercial sale of a product in a country defined as a milestone country under
the agreement. The agreement may be terminated earlier by either party in
certain circumstances, including upon a material breach by or bankruptcy of the
other party, and by United Therapeutics at any time upon 60 days' notice to
Pharmacia & Upjohn. Pursuant to the agreement, United Therapeutics is obliged to
use its best efforts to conduct a research and development program in the United
States relating to the use of the product containing the compound for at least
one indication, and to obtain regulatory approvals and market a product in the
United States and such other countries as United Therapeutics deems appropriate.

The term of the patent licensed from Pharmacia & Upjohn expires in March
2000 in the United States and various dates from January 2001 to February 2010
in 14 other countries. Pharmacia & Upjohn is responsible for prosecution and
maintenance of the U.S. and foreign patent portfolio relating to the UT-15
compound and synthesis method, but may discontinue prosecution of and/or abandon
the patent portfolio and give United Therapeutics an opportunity to prosecute or
maintain the portfolio.

TORAY INDUSTRIES LICENSES

In September 1998, United Therapeutics entered into an agreement with Toray
Industries, Inc. obtaining the exclusive right to develop and market beraprost
in the existing immediate-release oral form in the United States and Canada for
the treatment of pulmonary hypertension and other pulmonary vascular diseases,
plus certain additional rights of first refusal for other products, therapies or
territories. In exchange, United Therapeutics paid Toray cash and 166,666 shares
of common stock, and granted Toray an option to purchase an additional 166,666
shares of common stock at an exercise price of $9.00 per share. United
Therapeutics also agreed to pay Toray milestone payments of up to $750,000. In
March 1999, United Therapeutics entered into an agreement with Toray obtaining
the exclusive right to develop and market beraprost in the United States and
Canada for the treatment of peripheral vascular disease. United Therapeutics
paid Toray cash and 500,000 shares of common stock and agreed to pay Toray
milestone payments of up to $750,000.

Pursuant to the agreements, United Therapeutics has agreed to pay all costs
and expenses associated with undertaking clinical trials, obtaining regulatory
approvals and commercializing beraprost in the United States and Canada for the
treatment of pulmonary hypertension and peripheral vascular disease. Toray has
retained all manufacturing rights for beraprost. United Therapeutics has agreed
to purchase beraprost solely from Toray at specified prices based on volume. The
agreements each set forth a product development schedule. In the event that
development by United Therapeutics falls significantly behind the schedule
specified in either agreement, Toray may terminate that agreement. Furthermore,
United Therapeutics is responsible under the agreements for achieving minimum
annual product net sales as determined in advance by mutual agreement and in the
case of the first two years of commercial sales, minimum net sales of $2.5
million and $5 million. In the event that United Therapeutics is unable to meet
any minimum annual net sales requirement for two consecutive years, Toray may
convert the exclusive license to a non-exclusive license. United Therapeutics
would then be required to share any product marketing rights approved by the FDA
with a third-party licensee chosen by Toray. Each agreement expires 10 years
following FDA approval of beraprost for the particular disease indication.
United Therapeutics may extend each agreement for unlimited one-year periods
with Toray's consent.

The United States patents licensed by United Therapeutics cover the
compound beraprost and its method of synthesis and will expire in January 2003
and April 2010. The licensed Canadian patent expires in January 2003. There are
no issued patents covering methods of
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treating any disease, including pulmonary hypertension and peripheral vascular
disease, using beraprost. Toray is responsible for prosecuting and maintaining
beraprost patents with United Therapeutics' reasonable assistance.

CORTECH LICENSE

In November 1998, United Therapeutics signed an agreement with Cortech,
Inc. obtaining the exclusive right to develop and market a compound, now known
as UT-77, for all indications worldwide, except for certain dermatological uses.
In exchange, United Therapeutics made a cash payment and granted Cortech a
warrant to purchase 116,666 shares of common stock. The warrant vests only if
United Therapeutics continues developing UT-77 after November 2000 and
terminates in November 2004. United Therapeutics also agreed to make milestone
payments in the event it elects to develop the drug after November 2000 of up to
$6,450,000 for non-orphan drug indications and pay royalty fees between 6% and
10% of UT-77 net sales.

Pursuant to the agreement, United Therapeutics is required to use
reasonable efforts to develop and conduct research and pre-clinical and human
clinical trials to obtain all regulatory approvals to manufacture, market and
commercialize the products that United Therapeutics determines are commercially
feasible. In addition, United Therapeutics is responsible for a majority of the
costs for prosecuting and maintaining the patents covering UT-77. United
Therapeutics may choose to discontinue the development of the products without
penalty upon written notice to Cortech if the products do not satisfy United
Therapeutics' clinical needs for targeted indications. If United Therapeutics
terminates the agreement, however, Cortech will receive an exclusive
royalty-free license to use any improvements, know-how, data, information or
regulatory filings or any other intellectual property arising from United
Therapeutics' performance under the agreement. Under the agreement, inventions
or improvements to the technology for the manufacture or use of UT-77 are
retained by the party whose employees conceive them. Cortech may terminate the
agreement if United Therapeutics does not commence Phase II clinical trials of
UT-77 before May 2001, subject to certain exceptions.

UT-77 is patented in the United States and in 22 foreign countries. Patent
applications are pending in six countries. The U.S. patent expires in June 2010
and foreign counterparts expire between August 2008 and December 2012. Cortech
is responsible for patent prosecution and maintenance under the agreement.

GLOBAL MEDICAL ENTERPRISES AGREEMENT

In February 1999, United Therapeutics entered into an agreement with Global
Medical Enterprises Ltd. and Global Medical Enterprises Ltd., LLC. This
agreement gives to United Therapeutics the exclusive right to commercialize and
sell Ketotop in the United States, Canada, Mexico, Central America and the
Caribbean for treatment of all indications. Global Medical holds its rights
under an exclusive sales and distribution agreement with Pacific
Pharmaceuticals, Inc., the Korean manufacturer of Ketotop. Both the agreement
between United Therapeutics and Global Medical and the agreement between Global
Medical and Pacific Pharmaceuticals expire in July 2008. The agreement between
United Therapeutics and Global Medical will be extended if Pacific
Pharmaceuticals extends its agreement with Global Medical. The agreement is
subject to early termination in the event of a material breach or bankruptcy of
either party or if the underlying agreement between Global Medical and Pacific
Pharmaceuticals is terminated. United Therapeutics has agreed to purchase
Ketotop solely from Global Medical and will pay Global Medical a product
purchase price equal to Global Medical's cost of obtaining Ketotop from Pacific
Pharmaceuticals plus a profit percentage of between 15% and 23%. United
Therapeutics and Global Medical will jointly determine Global Medical's
compensation for sales in additional territories.

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Ketotop is patented in the United States, but is not patented in any other
territory where United Therapeutics has marketing rights. The Ketotop patent
expires in April 2013. There are no issued U.S. patents covering methods of
treating osteoarthritis with Ketotop. Global Medical and Pacific Pharmaceuticals
are responsible for prosecuting and maintaining the Ketotop patent portfolio. In
addition, United Therapeutics is obligated under its agreement with Global
Medical to obtain trademark protection on behalf of Pacific Pharmaceuticals for
the Ketotop mark in every jurisdiction where United Therapeutics has marketing
rights. United Therapeutics has not yet filed trademark applications for
Ketotop. If United Therapeutics fails to file them in the future, Global Medical
may terminate the agreement.

PATENT TERM EXTENSIONS

United Therapeutics believes that some of the patents to which it has
rights may be eligible for extensions of up to five years based upon patent term
restoration procedures in Europe and in the United States under the Waxman-Hatch
Act. For instance, under Waxman-Hatch, the Toray U.S. patent relating to the
compound beraprost could be extended by up to five years, giving the product
patent protection until as late as January 2008 if approval in the United States
is received before expiration of the original patent term in 2003. In addition,
patent extensions are available under similar laws in Europe. United
Therapeutics is considering which products it will seek to extend under
Waxman-Hatch and similar laws of other jurisdictions. See "-- Government
Regulation."

ORPHAN DRUG STATUS AND GRANTS

In June 1997, United Therapeutics was notified by the FDA that UT-15 for
primary pulmonary hypertension qualified for orphan drug status. The company
believes that if UT-15 is approved by the FDA, no other non-oral treatment for
primary pulmonary hypertension using prostacyclin will be approved by the FDA
for seven years, unless such other treatment is significantly safer or more
effective than UT-15. In November 1998, United Therapeutics received a $430,000
grant from the FDA's orphan drug grant program for the development of UT-15 for
the treatment of primary pulmonary hypertension, $107,500 of which has been
recognized as revenue through March 31, 1999.

In April 1998, United Therapeutics was notified by the FDA that beraprost
for advanced pulmonary hypertension qualified for orphan drug status. United
Therapeutics believes that if beraprost is approved by the FDA, no other oral
treatment for advanced pulmonary hypertension using prostacyclin will be
approved by the FDA for seven years, unless such other treatment is
significantly safer or more effective than beraprost.

CLINICAL INVESTIGATOR NETWORK

United Therapeutics has established a multi-center clinical investigation
network with approximately 40 leading medical centers. This network consists of
pulmonologists and cardiologists from centers in North America, Europe,
Australia and Israel who collectively treat a majority of patients with primary
pulmonary hypertension and a substantial number of patients with secondary
pulmonary hypertension. These physicians understand and have extensive
experience in clinical research of severe pulmonary diseases. United
Therapeutics is continually expanding its clinical investigator network by
adding professionals who have demonstrated success in conducting clinical
research required for regulatory approval.

MANUFACTURING

United Therapeutics contracts with qualified third-party manufacturers to
produce its drugs. This manufacturing strategy enables United Therapeutics to
direct financial resources to product licensing, clinical development and
anticipated commercialization efforts rather than diverting resources to
building manufacturing plants and establishing compliance with the FDA's good
manufacturing practices regulations.

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SynQuest, Inc., formerly known as Steroids, Ltd., manufactures and Cook
Imaging Corporation formulates the bulk active ingredient in UT-15 for United
Therapeutics. United Therapeutics has contracted with Schweizerhall, Inc. as a
second source of manufacturing. An analytical testing laboratory, Magellan
Laboratories Inc., tests the purity and stability of each batch of manufactured
UT-15 for compliance with FDA standards.

MARKETING AND SALES

United Therapeutics has contracted with MiniMed to exclusively handle, on a
commission basis, sales and marketing of UT-15 when formulated for subcutaneous
delivery for pulmonary hypertension. MiniMed has extensive experience in
marketing subcutaneous microinfusion systems. In addition, MiniMed maintains a
sizable insurance assistance department to expedite claims processing and to
assist patients in obtaining third-party reimbursement. United Therapeutics
retains sales and marketing rights to UT-15 for all indications other than
pulmonary hypertension. See "-- The MiniMed Strategic Alliance."

United Therapeutics intends to contract with MiniMed or a similarly
qualified organization for the sales and marketing of UT-15 for peripheral
vascular disease and for its other products. The company believes that there are
several qualified drug sales organizations that are capable of selectively
marketing drugs for target diseases in North America and Europe. United
Therapeutics does not intend to establish its own sales force, although it will
actively collaborate and co-promote its products with the drug sales
organizations with which it contracts.

COMPETITION

Many drug companies engage in research and development to commercialize
products to treat blood vessel and lung diseases. United Therapeutics competes
with these companies for funding, access to licenses, personnel, third-party
collaborators and product development. Almost all of these companies have
substantially greater financial, marketing, sales, distribution and technical
resources, and more experience in research and development, clinical trials and
regulatory matters, than United Therapeutics. United Therapeutics is aware of
existing treatments that will compete with its products, including the
following:

- UT-15 will compete with Flolan, the only FDA-approved treatment for
primary pulmonary hypertension;

- UT-15 and beraprost will compete with two FDA-approved drugs,
pentoxifylline and cilostazol, for the treatment of peripheral vascular
disease;

- UT-77 will compete with one FDA-approved drug, Prolastin, for the
treatment of chronic obstructive pulmonary disease; and

- Ketotop will compete with existing oral drugs containing the FDA-approved
pain reliever ketoprofen, as well as with a variety of other oral and
transdermal pain relievers.

Competitors may develop and commercialize additional products that compete
with United Therapeutics' products and may do so more rapidly than United
Therapeutics. For example, United Therapeutics understands that:

- Schering AG may develop Iloprost, a stable form of prostacyclin, as a
drug delivered through sustained inhalation to treat pulmonary
hypertension;

- Boehringer Ingelheim International GmbH was conducting a controlled study
of a potentially competitive drug for early-stage pulmonary hypertension;

- There are reports on the use of continuously inhaled nitric oxide as a
therapy for pulmonary hypertension of the newborn; and

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- Several companies are developing other drugs and surgical methods for
treating different aspects of peripheral vascular disease.

GOVERNMENTAL REGULATION

The research, development, testing, manufacture, promotion, marketing and
distribution of drug products are extensively regulated by government
authorities in the United States and other countries. Drugs are subject to
rigorous regulation by the FDA in the United States and similar regulatory
bodies in other countries. The steps ordinarily required before a new drug may
be marketed in the United States, which are similar to steps required in most
other countries, include:

- Preclinical laboratory tests, preclinical studies in animals and
formulation studies and the submission to the FDA of an investigational
new drug application for a new drug or antibiotic;

- Adequate and well-controlled clinical trials to establish the safety and
efficacy of the drug for each indication;

- The submission of a new drug application to the FDA; and

- FDA review and approval of the new drug application prior to any
commercial sale or shipment of the drug.

Preclinical tests include laboratory evaluation of product chemistry
toxicity and formulation, as well as animal studies. The results of preclinical
testing are submitted to the FDA as part of an investigational new drug
application. A 30-day waiting period after the filing of each investigational
new drug application is required prior to the commencement of clinical testing
in humans. At any time during this 30-day period or at any time thereafter, the
FDA may halt proposed or ongoing clinical trials until the FDA authorizes trials
under specified terms. The investigational new drug application process may be
extremely costly and substantially delay development of United Therapeutics'
products. Moreover, positive results of preclinical tests will not necessarily
indicate positive results in clinical trials.

Clinical trials to support new drug applications are typically conducted in
three sequential phases, but the phases may overlap. During Phase I, the initial
introduction to the drug into healthy human subjects or patients, the drug is
tested to assess metabolism, pharmacokinetics and pharmacological actions and
safety, including side effects associated with increasing doses. Phase II
usually involves studies in a limited patient population to:

- Assess the efficacy of the drug in specific, targeted indications;

- Assess dosage tolerance and optimal dosage; and

- Identify possible adverse effects and safety risks.

If a compound is found to be potentially effective and to have an
acceptable safety profile in Phase II evaluations, Phase III trials, also called
pivotal studies, major studies or advanced clinical trails, are undertaken to
further demonstrate clinical efficacy and to further test for safety within an
expanded patient population at geographically dispersed clinical study sites.

After successful completion of the required clinical testing, generally a
new drug application is submitted. The FDA may request additional information
before accepting a new drug application for filing, in which case the
application must be resubmitted with the additional information. Once the
submission has been accepted for filing, the FDA has 180 days to review the
application and respond to the applicant. The review process is often
significantly extended by FDA requests for additional information or
clarification. The FDA may refer the new drug application to an appropriate
advisory committee for review, evaluation and recommendation as

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to whether the application should be approved, but the FDA is not bound by the
recommendation of an advisory committee.

If FDA evaluations of the new drug application and the manufacturing
facilities are favorable, the FDA may issue either an approval letter or an
approvable letter. An approvable letter will usually contain a number of
conditions that must be met in order to secure final approval of the new drug
application and authorization of commercial marketing of the drug for certain
indications. The FDA may refuse to approve the new drug application or issue a
not approvable letter, outlining the deficiencies in the submission and often
requiring additional testing or information.

The FDA may designate a product as an "orphan drug" if the drug is a drug
intended to treat a rare disease or condition. A disease or condition is
considered rare if it affects fewer than 200,000 people in the United States, or
if it affects more than 200,000 people but will be sold for less money than it
will cost to develop. If a sponsor obtains the first FDA marketing approval for
a certain orphan drug, the sponsor will have a seven-year exclusive right to
market the drug for the orphan indication.

If regulatory approval of UT-15 or any of United Therapeutics' other
products is granted, it will be limited to certain disease states or conditions.
The manufacturers of approved products and their manufacturing facilities will
be subject to continual review and periodic inspections. Because United
Therapeutics intends to contract with third parties for manufacturing of its
products, its control of compliance with FDA requirements will be incomplete. In
addition, identification of certain side effects or the occurrence of
manufacturing problems after any of its drugs are on the market could cause
subsequent withdrawal of approval, reformulation of the drug, additional
preclinical testing or clinical trials, and changes in labeling of the product.

The Waxman-Hatch Act provides that patent terms may be extended during the
FDA regulatory review period for the related product. This period is generally
one-half the time between the effective date of an investigational new drug
application and the submission date of a new drug application, plus the time
between the submission date of a new drug application and the approval of that
application, subject to a maximum extension of five years. Similar patent term
extensions are available under European laws.

Outside the United States, United Therapeutics' ability to market its
products will also be contingent upon receiving marketing authorizations from
the appropriate regulatory authorities. The foreign regulatory approval process
includes all of the risks associated with FDA approval set forth above. The
requirements governing the conduct of clinical trials and marketing
authorization vary widely from country to country. At present, foreign marketing
authorizations are applied for at a national level, although within Europe
procedures are available to companies wishing to market a product in more than
one EU member state.

Under a new regulatory system in the EU, marketing authorizations may be
submitted at either a centralized, a decentralized or a national level. The
centralized procedure is mandatory for the approval of biotechnology products
and high technology products and available at the applicant's option for other
products. The centralized procedure provides for the grant of a single marketing
authorization that is valid in all EU member states. The decentralized procedure
is available for all medicinal products that are not subject to the centralized
procedure. The decentralized procedure provides for mutual recognition of
national approval decisions, changes existing procedures for national approvals
and establishes procedures for coordinated EU actions on products, suspensions
and withdrawals. Under this procedure, the holder of a national marketing
authorization for which mutual recognition is sought may submit an application
to one or more EU member states, certify that the dossier is identical to that
on which the first approval was based or explain any differences and certify
that identical dossiers are being submitted to all member states for which
recognition is sought. Within 90 days of receiving the application and
assessment report, each EU member state must decide whether to recognize
approval. The
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procedure encourages member states to work with applicants and other regulatory
authorities to resolve disputes concerning mutual recognition. Lack of objection
of a given country within 90 days automatically results in approval of the EU
country.

United Therapeutics will choose the appropriate route of European
regulatory filing to accomplish the most rapid regulatory approvals. However,
the chosen regulatory strategy may not secure regulatory approvals or approvals
of the chosen product indications. United Therapeutics intends to secure
European regulatory approval for the use of UT-15 for pulmonary hypertension and
peripheral vascular disease in parallel with its United States and Canadian
regulatory filings. The company has contracted with Quintiles (UK) Ltd., a
contract research organization, to assist with its European clinical development
and regulatory actions.

PRODUCT LIABILITY INSURANCE

United Therapeutics owns a Products/Clinical Trials Liability Insurance
Policy with Federal Insurance Company. It is a master policy with limits of $5
million in the aggregate and $5 million per occurrence. In addition, United
Therapeutics owns policies covering clinical trials in Austria, France, Spain
and Italy. United Therapeutics believes this insurance is adequate.

EMPLOYEES

United Therapeutics had 20 employees as of December 31, 1998. The company
also maintains active independent contractor relationships with various
individuals with whom it has month-to-month consulting contracts. The company
believes its employee relations are excellent. None of United Therapeutics'
employees is subject to a collective bargaining agreement.

FACILITIES

United Therapeutics maintains three facilities. The company's clinical
development office is in Research Triangle Park, North Carolina in 5,000 square
feet of leased office space. United Therapeutics' corporate office is in Silver
Spring, Maryland in an 8,000 square foot building that it owns. The company's
subsidiary, Unither Telemedicine Services Corporation, leases approximately
3,000 square feet of office space in the District of Columbia. The Research
Triangle Park lease expires in June 2001, and the District of Columbia lease
expires in February 2001 with an extension at United Therapeutics' option.
United Therapeutics believes these facilities are adequate for its current and
planned operations.

LEGAL PROCEEDINGS

United Therapeutics is not a party to any legal proceedings.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding the executive
officers and directors of United Therapeutics:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- ----------------------------------------------------
<S> <C> <C>
Martine A. Rothblatt(1)(4)............. 44 Chairman, Chief Executive Officer and Director
James W. Crow, Ph.D.(1)(4)............. 55 President, Chief Operating Officer and Director
Gilles Cloutier, Ph.D.(1).............. 54 Executive Vice President, Business Development,
Chief Financial Officer, Treasurer and Director
Shelmer D. Blackburn, Jr.(1)........... 38 Director of Operations, Secretary and Director
Paul A. Mahon.......................... 35 Assistant Secretary and General Counsel
Olivia Giscard d'Estaing............... 37 Director
David Gooray, M.D.(2)(3)............... 49 Director
Jean-Guy Lambert(2).................... 58 Director
Noah A. Samara(3)(4)................... 42 Director
</TABLE>

- -------------------------
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) Member of Nominating Committee.

Martine A. Rothblatt, J.D., M.B.A., is a co-founder of United Therapeutics.
She has served as Chairman of its Board of Directors and Chief Executive Officer
since its inception in 1996. In 1995, Ms. Rothblatt endowed the PPH Cure
Foundation to help find cures for pulmonary hypertension, which afflicts one of
her daughters, and continues to manage the foundation. Since 1990, she has
helped develop, as an independent consultant, satellite communications
businesses, including CD Radio Inc., which she founded and served as Chairman
and Chief Executive Officer until December 1992, WorldSpace Corp., which she
co-founded and served as Chief Operating Officer from January 1993 through
January 1995, and Sky Station International, Inc., where she served part-time as
Executive Vice President from October 1996 through November 1997. Since February
1995 Ms. Rothblatt has also served as President of Beacon Projects, Inc., a
company she incorporated for her satellite communications consulting and real
estate management activities, and as Of Counsel to the law firm of Mahon Patusky
Rothblatt & Fisher, Chartered. Ms. Rothblatt also serves as the Chairman of the
Bioethics Subcommittee of the International Bar Association and President of the
William Harvey Medical Research Foundation. Ms. Rothblatt devotes substantially
all of her time to the affairs of United Therapeutics.

James W. Crow, Ph.D., is a co-founder of United Therapeutics and has served
as President and Chief Operating Officer and as a member of its Board of
Directors since its inception in 1996. Prior to 1996, Dr. Crow worked for more
than 18 years at Glaxo Wellcome Inc., formerly Burroughs Wellcome Co., in
positions such as International Project Leader, Associate Medical Director and
Senior Clinical Research Scientist. While he was associate director of the
Pulmonary II Section, Dr. Crow led the team that developed and obtained FDA
approval for Flolan for the treatment of primary pulmonary hypertension patients
in September 1995.

Gilles Cloutier, Ph.D., is a co-founder of United Therapeutics and has
served as Executive Vice President, Business Development and Treasurer and as a
member of its Board of Directors since its inception in 1996 and Chief Financial
Officer since December 1997. Prior to 1996, Dr. Cloutier served as President of
CatoPharma Canada, Inc. from April 1992 to February 1997. From April 1990 to
April 1992, Dr. Cloutier was the Vice President of Clinical Operations at

40
<PAGE> 45

Quintiles Transnational Corp. Dr. Cloutier has more than 24 years of experience
in all phases of the drug development process in the United States, Canada and
other international locations.

Shelmer D. Blackburn, Jr., B.S., is a co-founder of United Therapeutics and
has served as Director of Operations, Secretary and a member of its Board of
Directors since its inception in 1996. Prior to 1996, Mr. Blackburn worked for
eight years at Glaxo Wellcome Inc., formerly Burroughs Wellcome Co., where he
was responsible for the design and management of clinical trials for Flolan, as
well as for an artificial surfactant for the treatment of neonatal patients with
respiratory distress syndrome.

Paul A. Mahon has served as General Counsel and Assistant Secretary of
United Therapeutics since its inception in 1996. He has been a principal and
managing partner of Mahon Patusky Rothblatt & Fisher, Chartered since its
formation in 1993.

Jean-Guy Lambert, M.B.A., has served on the Board of Directors of United
Therapeutics since July 1997. Since August 1996, Mr. Lambert has served as
Chairman, President and Chief Executive Officer of Dacha Capital, Inc., a
merchant bank. From June 1993 to August 1996, Mr. Lambert was President and
Chief Executive Officer of Intermont Inc., an oil and gas corporation. From
September 1991 to June 1993, Mr. Lambert acted as financial advisor to
Hydro-Quebec. Mr. Lambert is a Director of several publicly traded companies,
including QR Canada Capital, Inc., Enerplus Resources Fund and Explogas Ltd.

Noah A. Samara, J.D., M.B.D., has served on the Board of Directors of
United Therapeutics since 1997. He has served as Chairman and Chief Executive
Officer of WorldSpace Corporation, a satellite communications company, since
August 1990.

David Gooray, M.D., has served on the Board of Directors of United
Therapeutics since December 1997. Dr. Gooray has practiced cardiovascular
medicine in Virginia, Maryland and the District of Columbia since July 1986.
Since 1986, he has also served as an instructor in medicine at Howard University
Medical School and principal investigator in a National Institutes of Health
study.

Olivia Giscard d'Estaing, M.S.B., has served on the Board of Directors
since July 1998. She has been employed as Director of Asset Management Services
at Banque Eurofin since 1988. She is in charge of mutual fund management with
assets over $1 billion.

The Amended and Restated Certificate of Incorporation of United
Therapeutics provides that the Board of Directors is to consist of three
classes, as nearly equal in size as the number of members permits. Each class of
directors generally has a term of three years, except that the term of the
initial Class I directors expires at the annual meeting of stockholders in 2000.
At each annual stockholders meeting, the successors of the class of directors
whose term expires at such meeting shall be elected to hold office for a term
expiring in three years. United Therapeutics' Board of Directors is currently
comprised of eight directors, with two classes of three directors and one class
of two directors. Executive officers are elected by, and serve at the discretion
of, the Board.

BOARD COMMITTEES

The Board of Directors has the following committees: an Executive
Committee; a Compensation Committee, which approves salaries and incentive
compensation for executive officers of the company and which administers the
company's equity incentive plan; an Audit Committee, which reviews the results
and scope of the audit and other services provided by United Therapeutics'
independent auditors; and a Nominating Committee, which reviews and recommends
candidates for the Board of Directors.

41
<PAGE> 46

SCIENTIFIC ADVISORY BOARD

United Therapeutics has assembled a team of scientific and medical advisors
to advise it on issues related to specific pharmaceutical products. The current
group of advisors are experts in pulmonary hypertension and vascular biology.
United Therapeutics plans to assemble different advisory groups specific to
other products under development. In certain cases, these advisors have agreed
to be available for consultation for a specified number of days each year, but
individuals may consult and meet informally with the company on a more frequent
basis. All of these scientific and medical advisors are employed by major
medical schools, research institutions, hospitals, or other institutions and may
have other commitments that may limit their availability to United Therapeutics.
United Therapeutics' Scientific Advisory Board consists of the following
individuals:

Sir John Vane, D.Sc., F.R.S., is the 1982 Nobel Laureate in Physiology or
Medicine and discoverer of prostacyclin. Dr. Vane served as the Group Research
and Development Director at the Wellcome Foundation, Ltd. from 1974 to 1986, and
is President of the William Harvey Research Institute, The Medical School of
Queen Mary and Westfield College, London, which he founded in 1986. Since 1987,
he has been the non-executive Chairman of Technology Transfer Company of the
Imperial Cancer Research Fund. Since 1993, he has been Chairman of England's
Biomedical Research Education Trust. Throughout his distinguished career, Dr.
Vane has received numerous honors, in addition to over 25 Distinguished
Lectureships and 30 honorary memberships and degrees. He received his D. Phil.
and D.Sc. from Oxford University and is the author of more than 800
publications. He serves on the Board of Directors of deCODE genetics Inc. and,
until recently, served on the Board of Directors of Vanguard Medica Group plc, a
pharmaceutical company which he founded in 1991 and which is traded on the
London Stock Exchange.

Salvador Moncada, M.D., Ph.D., D.Sc., has been a Director of the Cruciform
Project at the University College, London, England since 1995. Dr. Moncada
co-discovered prostacyclin and Flolan. He was a Director of Research at the
Wellcome Foundation, Ltd. United Kingdom from 1986 to 1995. Dr. Moncada is also
internationally recognized as one of the key discoverers of the role of nitric
oxide in vascular biology. He is the author and editor of numerous scientific
textbooks, and the recipient of over 50 scientific awards, honorary memberships
and degrees.

Sir Magdi Yacoub, M.D., F.A.C.S., is a leading cardiothoracic surgeon and
developer of surgical techniques of heart and heart-lung transplantation. Dr.
Yacoub has been a professor at the National Heart and Lung Institute in London
since 1986.

Lewis Rubin, M.D., is the Professor of Medicine and Head of Pulmonary and
Critical Care Medicine, University of California, San Diego. Dr. Rubin is the
author of Primary Pulmonary Hypertension and numerous other publications on
pulmonary hypertension and pulmonary physiology. He is the recipient of the PPH
Cure Foundation 1997 Scientific Progress Award.

Robyn Barst, M.D., has been the Director since 1987 of the Children's
Pulmonary Hypertension Center, Columbia Presbyterian Medical Center. Dr. Barst
is an Associate Professor of Pediatrics and Medicine, Columbia University,
College of Physicians and Surgeons. She is the recipient of the PPH Cure
Foundation 1996 Scientific Progress Award and a leading expert on pulmonary
hypertension in children.

Urban Ramstedt, Ph.D., is the Director of Immunology at AVANT
Immunotherapeutics, Inc., Needham, Massachusetts. Dr. Ramstedt has written over
40 articles on immunology and gene therapy.

Tim Higenbottam, M.D., F.R.C.P., has been a Professor of Respiratory
Medicine at Sheffield University since 1995. Dr. Higenbottam is a leading
European expert on pulmonary hypertension. From 1981 to 1995, he was the Head of
Pulmonary Hypertension Medicine at Papworth Hospital, Cambridge, England.
42
<PAGE> 47

Jay H. Sanders, M.D., F.A.C.P., Dr. Sanders is the President and CEO of The
Global Telemedicine Group, Founding President of the American Telemedicine
Association, Professor of Medicine (Adjunct) at Johns Hopkins University School
of Medicine, and Visiting Professor, Yale University School of Medicine. He is a
member of the Executive Committee of the Board of Directors of the Universal
Service Administrative Corporation and serves on the Department of Defense
Telemedicine Board of Directors. Dr. Sanders is the Senior Editor of the
Telemedicine Journal and is generally recognized as America's leading expert on
telemedicine. In addition to serving on the United Therapeutics Scientific
Advisory Board, Dr. Sanders is also Chairman of the Unither Telemedicine
Advisory Board.

DIRECTOR COMPENSATION

United Therapeutics reimburses each member of its Board of Directors for
out-of-pocket expenses incurred in connection with attending Board meetings.
Each director who is not also an employee also receives a fee of $8,000 per
year.

SCIENTIFIC ADVISOR COMPENSATION

Each of Drs. Vane, Moncada, Yacoub and Ramstedt have agreements under which
he is entitled to receive options to purchase 1,666 shares of the company's
common stock for each year of service on the Scientific Advisory Board, plus
$3,000 per meeting attended. United Therapeutics granted 3,333 shares of common
stock to each of Drs. Vane, Moncada and Yacoub for his service from October 1996
through October 1998. United Therapeutics granted Dr. Ramstedt options to
purchase 1,666 shares of common stock for his service on the Scientific Advisory
Board during 1997 and 1998.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the Compensation Committee members has served as an officer or
employee of United Therapeutics or its subsidiaries, except Martine A.
Rothblatt, who has been Chairman and Chief Executive Officer of United
Therapeutics since its inception in 1996. Effective March 1999, Ms. Rothblatt
resigned from the Compensation Committee, which currently consists solely of
non-employee directors.

43
<PAGE> 48

EXECUTIVE COMPENSATION

The following table sets forth certain summary information concerning the
compensation awarded to or earned by United Therapeutics' Chief Executive
Officer and the other executive officers who earned in excess of $100,000 in
cash compensation during the year ended December 31, 1998. All options reflected
in the chart were awarded under United Therapeutics' Amended and Restated Equity
Incentive Plan.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS(#)
- --------------------------- ---- -------- ----------
<S> <C> <C> <C>
Martine A. Rothblatt....................................... 1998 $120,000 83,333
Chairman and Chief Executive Officer
James W. Crow.............................................. 1998 150,000 69,999
President and Chief Operating Officer
Gilles Cloutier............................................ 1998 150,000 50,000
Executive Vice President, Business Development,
Chief Financial Officer and Treasurer
Shelmer D. Blackburn, Jr................................... 1998 100,000 53,333
Director of Operations and Secretary
</TABLE>

44
<PAGE> 49

STOCK OPTION GRANTS AND EXERCISES

The following tables show for the year ended December 31, 1998, certain
information regarding options granted to, and held at year end by, the named
executive officers. Each of the options listed in the table below was granted
pursuant to United Therapeutics' Amended and Restated Equity Incentive Plan and
vests upon the achievement of certain business milestones within certain
specified time periods. The first table is based on an aggregate of 611,901
options granted to employees, directors and consultants in 1998, including the
named executive officers. The exercise price per share of each option was equal
to the fair market value of the common stock on the date of grant, as determined
by the Board of Directors. The value of unexercised in-the-money options at
December 31, 1998 is based on an assumed initial public offering price of
$16.00, less the exercise price, without taking into account any taxes that may
be payable in connection with the transaction, multiplied by the number of
shares underlying the option.

OPTION GRANTS IN FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED(#) FISCAL YEAR SHARE DATE 5% 10%
- ---- ---------- -------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Martine A. Rothblatt... 83,333 13.6% $19.80 11/08 $1,037,672 $2,629,665
James W. Crow.......... 3,333 0.5 3.00 3/08 6,288 15,936
66,666 10.9 18.00 11/08 754,666 1,912,472
Gilles Cloutier........ 50,000 8.2 18.00 11/08 566,005 1,434,368
Shelmer D. Blackburn... 3,333 0.5 3.00 3/08 6,288 15,936
50,000 8.2 18.00 11/08 566,005 1,434,368
</TABLE>

Amounts reported in the potential realizable value column above are
hypothetical values that may be realized upon exercise of the options
immediately prior to the expiration of their term, calculated by assuming that
the stock price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire term
of the option (10 years). The 5% and 10% assumed rates of appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent United Therapeutics' estimate or projection of the future common stock
price.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998(#) DECEMBER 31, 1998($)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Martine A. Rothblatt.............. 13,333 136,666 $ -- $ --
James W. Crow..................... 13,333 115,000 13,333 88,329
Gilles Cloutier................... 10,000 90,000 10,000 40,000
Shelmer D. Blackburn, Jr.......... 8,333 78,333 8,333 68,329
</TABLE>

45
<PAGE> 50

EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS

In April 1999, United Therapeutics entered into an Executive Employment
Agreement with Martine A. Rothblatt, its Chief Executive Officer. The employment
agreement provides for an initial five year term ending on December 31, 2004,
and automatically renews for successive one-year periods unless either party
terminates the agreement. The current annual salary specified in the agreement
is $180,000. Ms. Rothblatt is entitled to bonuses for each year of the initial
term of the agreement in the form of stock options, in addition to other
discretionary bonuses that may be awarded by the Board of Directors. At the end
of the first year of her agreement, Ms. Rothblatt will receive an option to
purchase the number of shares of common stock equal to one percent of the
increase in the company's market capitalization after United Therapeutics'
initial public offering, divided by 18. At the end of each of the next four
years, Ms. Rothblatt will receive an option to purchase the number of shares
equal to one percent of the increase in United Therapeutics' market
capitalization over the prior year, divided by 18. These options will be fully
exercisable on the date of grant. The options will have an exercise price equal
to or exceeding the fair market value of a share of United Therapeutics' common
stock on the date of grant. The options are exercisable over five years if Ms.
Rothblatt is a 10% or greater shareholder on the date of grant, or 10 years
otherwise.

If Ms. Rothblatt's employment is terminated due to her death or disability,
the company will continue to pay to Ms. Rothblatt or her estate her current base
salary through the end of the calendar year following such death or disability,
and, if her employment is terminated for disability, United Therapeutics will
pay for continued benefits under its short-term and long-term disability
insurance programs. If Ms. Rothblatt's employment is terminated by United
Therapeutics other than for cause, or if Ms. Rothblatt terminates her employment
for good reason, as these terms are defined in the agreement, including
circumstances involving a change in control of United Therapeutics, she will be
entitled to a lump sum cash payment equal to the sum of:

- Her current base salary plus any bonus and incentive payments which have
been earned through the date of termination;

- The greater of her bonus and incentive payments for the prior year or the
average of such payments for the prior two years, on a prorated basis for
the year of termination;

- Three times the sum of her highest annual base salary for the preceding
12 months and the greater of her previous year's bonus and incentive
payment or the average of those payments for the previous two years; and

- The difference between the fair market price and the exercise price of
any non-vested options held by Ms. Rothblatt.

In addition, Ms. Rothblatt will receive certain employee and retirement
benefits. The agreement prohibits Ms. Rothblatt from engaging in activities
competitive with the company for five years following termination of her
employment.

United Therapeutics has entered into employment agreements with each of
Drs. Crow and Cloutier and Mr. Blackburn. The term of Dr. Crow's agreement ends
on July 15, 2002, and provides for an annual base salary of at least $150,000.
The term of Mr. Blackburn's agreement ends on August 1, 2002, and provides for
an annual base salary of at least $100,000. The term of Dr. Cloutier's agreement
ends on April 7, 2003, and provides for an annual base salary of at least
$150,000. Each of the agreements with Drs. Crow and Cloutier and Mr. Blackburn
also provides for an automatic annual renewal unless either party terminates
with at least 30 days notice to the other party. In addition, each of the
agreements provides that if the employee is terminated by United Therapeutics
other than for cause, or if the employee terminates the agreement for good
reason, as those terms are defined in the agreements, the employee is entitled
to his base salary through the full term of the agreement. In addition, each of
these agreements prohibits
46
<PAGE> 51

Drs. Crow and Cloutier and Mr. Blackburn from accepting employment, consultancy
or other business relationships with a competitor of United Therapeutics for
twelve months following his last receipt of compensation from United
Therapeutics.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

The company's Equity Incentive Plan originally became effective November
12, 1997, and was subsequently amended and restated effective April 9, 1999. The
Plan provides for the grant of awards, including options, stock appreciation
rights, restricted stock awards or performances share awards or any other right
or interest relating to shares or cash to eligible directors, officers, key
employees and consultants. As amended, a total of 14,939,517 shares of common
stock has been reserved and is available for awards under the Plan, including
7,939,517 shares of common stock specifically reserved for stock option grants
to the Chief Executive Officer in accordance with her Executive Employment
Agreement. The maximum number of shares that may be granted to any one or more
participants in any calendar year (excluding grants to the Chief Executive
Officer) may not exceed 500,000 shares. The maximum number of shares that may be
granted to the Chief Executive Officer in any one calendar year may not exceed
500,000 shares in 2000, 701,353 shares in 2001, 681,434 shares in 2002,
2,757,832 shares in 2003 and 3,298,898 shares in 2004.

The Plan is administered by the Compensation Committee, which must consist
of two or more non-employee directors approved by the Board. The committee has
the power to determine the terms and conditions of awards, including but not
limited to the exercise price, the number of shares of common stock subject to
each award, the vesting provisions of each award and the form of consideration
payable upon exercise. In addition, the committee has the authority to amend,
modify or terminate the Plan, provided that no action may affect any shares
previously issued and sold or any award previously granted under the Plan
without the written consent of the participant.

Options granted under the Plan are not generally transferable by the
optionee. Options granted under the Plan must generally be exercised within 10
years, subject to earlier termination upon termination of the holder's
employment, disability or death, but in no event later than the expiration of
the option's term. The exercise price of all options granted under the Plan must
be at least equal to the fair market value of the underlying shares of common
stock on the date of the grant. Incentive stock options granted to any
participant who owns 10% or more of United Therapeutics' outstanding common
stock must have an exercise price equal to or exceeding 110% of the fair market
value of a share of common stock on the date of the grant and must not be
exercisable for longer than five years.

Under the Plan, a participant may also be awarded a "performance award,"
which means that the participant may receive cash, stock or other awards which
is contingent upon achieving performance goals established by the committee. The
committee may also make "deferred share" awards under the Plan. A participant
who receives a deferred share award is entitled to receive the company's stock
in the future for services performed between the date of the award and the date
the participant may receive the stock.

A participant who is granted a "stock appreciation right" under the Plan
has the right to receive all or a percentage of the fair market value of a share
of stock on the date of exercise of the stock appreciation right minus the grant
price of the stock appreciation right determined by the committee. If a stock
appreciation right is granted in connection with an incentive stock option, the
grant price must not be less than the fair market value of the stock on the date
of grant. Finally, the committee may make "restricted stock" awards under the
Plan. Restricted stock granted under the Plan is subject to such terms and
conditions as the committee determines when it makes the award, and carries
voting, dividend and other ownership rights as set forth in the award agreement
relating to the restricted stock. Unless the committee otherwise provides,

47
<PAGE> 52

upon termination of employment during the period when the restrictions apply,
the participant's restricted stock is forfeited to United Therapeutics.

In the event of certain changes of control of United Therapeutics, the
Compensation Committee has discretion to provide that any award under the Plan
that may be exercised will become fully exercisable, and/or that all
restrictions on any awards under the Plan will lapse as the Compensation
Committee determines, which may be prior to the change of control.

As of April 9, 1999 options to purchase 881,985 shares of common stock were
outstanding. There are 14,057,532 shares reserved for future grants or purchases
under the Plan, including 7,939,517 shares of common stock reserved for issuance
to the Company's Chairman and Chief Executive Officer pursuant to her employment
agreement. No performance awards, deferred share awards, stock appreciation
rights or restricted stock awards are outstanding under the Plan. The Plan will
terminate in November 2007, unless terminated sooner by the Board.

48
<PAGE> 53

CERTAIN TRANSACTIONS

On April 29, 1998, United Therapeutics purchased an office building for its
corporate headquarters from an entity owned by Martine A. Rothblatt, the
Chairman and Chief Executive Officer of United Therapeutics, for approximately
$581,000, including expenses. United Therapeutics leased office space from
Beacon Projects, Inc. in 1997 and 1998 under a lease that was terminated when
the company purchased its building. Ms. Rothblatt is the President and owner of
Beacon Projects. Payments under that lease totaled $12,000 for the year ended
December 31, 1998, and $15,000 for the year ended December 31, 1997. In
addition, Unither Telemedicine Services Corporation, a subsidiary of United
Therapeutics, entered into a lease for office space with Beacon Projects in
March 1999. Payments under this lease will be approximately $30,000 annually
until the lease expires in 2001. The Board of Directors approved these
transactions based on independent appraisals and without the participation of
Ms. Rothblatt. United Therapeutics believes that the terms of each of the
transactions were at least as favorable as terms it could have obtained in arm's
length transactions with an independent third party.

Each of Ms. Rothblatt, Paul A. Mahon, General Counsel and Assistant
Secretary of United Therapeutics, and Christopher Patusky, an officer of the
company's telemedicine subsidiary, is a principal of the law firm Mahon Patusky
Rothblatt & Fisher, Chartered, which United Therapeutics has retained in the
past and intends to retain in the future. United Therapeutics paid the law firm
$107,000 during the three months ended March 31, 1999, $157,000 during the year
ended December 31, 1998, $81,000 during the year ended December 31, 1997 and
$5,000 during the period from inception to December 31, 1996.

In 1998, United Therapeutics entered into a cooperative drug discovery
agreement with William Harvey Research Limited. United Therapeutics paid
$162,273 during 1998 and $85,988 for the three months ended March 31, 1999 under
this agreement. Under the agreement, United Therapeutics is required to pay
William Harvey a royalty equal to 10% of net sales and license fees that the
company earns from discoveries of William Harvey. Ms. Rothblatt is president of
William Harvey Medical Research Foundation, an affiliate of William Harvey
Research Limited.

During 1997, Ms. Rothblatt loaned United Therapeutics $500,000 at an
interest rate of 10% per annum. On August 19, 1997, principal and accrued
interest totaling $508,334 was converted into common stock pursuant to the terms
of the loan agreement. The company issued to Ms. Rothblatt 309,428 shares at
approximately $1.62 per share.

During 1996 and 1997, United Therapeutics earned substantially all of its
revenue from the PPH Cure Foundation. Ms. Rothblatt is also a Director of the
PPH Cure Foundation. United Therapeutics earned $115,909 for the year ended
December 31, 1997, and $153,972 during the period from the date of inception of
June 26, 1996 through December 31, 1996.

The Amended and Restated Certificate of Incorporation and the Amended and
Restated By-laws provide that United Therapeutics will indemnify each of its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law. In addition, United Therapeutics is entering into indemnity
agreements with each of the directors, which provide that United Therapeutics
will indemnify each director to the fullest extent permitted by law.

49
<PAGE> 54

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of United Therapeutics' common stock as of March 31, 1999,
and as adjusted to reflect the sale of the shares of common stock offered
hereby, by each person who United Therapeutics knows owns more than 5% of its
common stock, each of its directors, each of its named executive officers, and
all of its directors and executive officers as a group. Except as otherwise
noted below, the address of each person listed below is the company's address.
Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect to
securities. Beneficial ownership also includes shares of stock subject to
options and warrants currently exercisable or convertible, or exercisable or
convertible within 60 days of the date of this table. Percentage of beneficial
ownership is based on 10,726,967 shares of common stock outstanding as of March
31, 1999 and 15,226,967 shares of common stock outstanding after completion of
this offering, assuming the underwriters do not exercise their over-allotment
option. Unless otherwise indicated, to the knowledge of United Therapeutics, all
persons listed have sole voting and investment power with respect to their
shares of common stock, except to the extent authority is shared by spouses
under applicable law.

<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES
NUMBER OF SHARES -------------------
OF COMMON STOCK BEFORE AFTER
NAME BENEFICIALLY OWNED OFFERING OFFERING
- ---- ------------------- -------- --------
<S> <C> <C> <C>
Noah A. Samara.......................................... 3,035,229 28.3% 19.9%
Martine A. Rothblatt(1)................................. 1,248,369 11.6% 8.2%
Credit Suisse Asset Mgmt Pharma Fund
P.O. Box 800
CH 8070 Zurich
Switzerland........................................... 666,666 6.2% 4.4%
Jean-Guy Lambert(2)..................................... 571,942 5.3% 3.8%
Merrill Lynch KECALP 1997
225 Liberty Street
New York, New York 10080-6123......................... 555,555 5.2% 3.6%
James W. Crow(3)........................................ 441,663 4.1% 2.9%
Gilles Cloutier(4)...................................... 436,666 4.1% 2.9%
Shelmer D. Blackburn, Jr.(5)............................ 431,664 4.0% 2.8%
Olivia Giscard d'Estaing(6)............................. 207,666 1.9% 1.4%
David Gooray, M.D. ..................................... 11,333 * *
All directors and executive officers as a group
(9 persons)(7)........................................ 6,394,864 59.6% 42.0%
</TABLE>

- -------------------------
* Represents less than one percent.
(1) Includes 35,552 shares held by Ms. Rothblatt's children and 413,204 shares
held by her spouse. Ms. Rothblatt disclaims beneficial ownership of such
shares. Also includes 26,666 shares of common stock issuable upon exercise
of stock options within 60 days.
(2) Includes 500,000 shares of common stock owned by Dacha Capital, Inc. Mr.
Lambert is the President and Chief Executive Officer of Dacha Capital. Mr.
Lambert disclaims beneficial ownership of shares held by Dacha Capital
except to the extent of his proportionate interest therein. Also includes
33,332 shares of common stock issuable upon exercise of stock options within
60 days.
(3) Includes 24,998 shares of common stock issuable upon exercise of stock
options within 60 days.
(4) Includes 416,666 owned by The Hammock House Inc., LLC. Dr. Cloutier is the
Managing Director of Hammock House. Also includes 20,000 shares of common
stock issuable upon exercise of stock options within 60 days.
(5) Includes 14,998 shares of common stock issuable upon exercise of stock
options within 60 days.
(6) Includes 199,333 shares of common stock owned by Caisse Central des Banques
Popularies, an affiliate of Banque Eurofin. Ms. Giscard d'Estaing is the
Director of Asset Management at Banque Eurofin. Ms. Giscard d'Estaing
disclaims beneficial ownership of shares held by Caisse Central des Banques
Popularies.
(7) Includes 120,327 shares of common stock issuable upon exercise of stock
options within 60 days.

50
<PAGE> 55

DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, United Therapeutics' authorized capital
stock will consist of 100 million shares of common stock, par value $0.01, and
10 million shares of preferred stock, par value $0.01.

COMMON STOCK

Upon the closing of this offering, there will be 15,226,967 shares of
common stock outstanding. As of June 1, 1999, there were approximately 169
holders of record of common stock. The holders of common stock are entitled to
one vote for each share held of record on all matters submitted to a vote of
United Therapeutics' stockholders. The holders of common stock have no
cumulative voting rights with respect to the election of directors or any other
matter.

Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at such
time and in such amounts as the Board of Directors may from time to time
determine.

Upon the liquidation, dissolution, distribution of assets or winding up of
United Therapeutics, holders of common stock are entitled to share ratably, in
proportion to the number of shares of common stock held, all the assets
remaining after distribution of the full preferential amounts due to the holders
of the outstanding shares of preferred stock, if any. A consolidation, merger or
reorganization of United Therapeutics with any other corporation, or a sale of
all or substantially all of the assets shall not be considered a dissolution,
liquidation or winding up of United Therapeutics.

The Amended and Restated Certificate of Incorporation denies holders of
common stock all preemptive rights and rights to covert their common stock into
any other securities. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and
all shares of common stock to be outstanding upon completion of this offering
will be, fully paid and nonassessable.

PREFERRED STOCK

Pursuant to United Therapeutics' Amended and Restated Certificate of
Incorporation, the Board of Directors will have the authority, without further
action by the stockholders, to issue up to 10 million shares of preferred stock
in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of such series,
without any further vote or action by the stockholders. The issuance of
preferred stock could adversely affect the voting power of holders of common
stock, and the likelihood that such holders will receive dividend payments and
payments upon liquidation may have the effect of delaying, deferring or
preventing a change in control of United Therapeutics, which could have a
depressive effect on the market price of United Therapeutics' common stock.
United Therapeutics has no present plan to issue any shares of preferred stock.

REGISTRATION RIGHTS

Upon completion of this offering, 797,220 shares of common stock will be
entitled to certain rights with respect to the registration of such shares under
the Securities Act of 1933. If United Therapeutics proposes to register any of
its securities under the Securities Act, either for its own account or for the
account of other security holders, the holders of registration rights will be
entitled to notice of the registration and will be entitled to include, at
United Therapeutics' expense, their shares in the registration. In addition,
certain of the holders may require United

51
<PAGE> 56

Therapeutics, at its expense and on not more than two occasions at any time
beginning approximately six months from the date of the closing of this
offering, to file a registration statement under the Securities Act, with
respect to their shares of common stock, and United Therapeutics will be
required to use its best efforts to effect the registration, subject to certain
conditions and limitations. Further, certain holders may require the company at
its expense to register their shares on Form S-3 when such form becomes
available to the company, subject to certain conditions and limitations.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

United Therapeutics is subject to Section 203 of the Delaware General
Corporation Law regulating corporate takeovers. Section 203, subject to certain
exceptions, prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years
following the date that such stockholder became an interested stockholder
unless:

- Prior to such date, the Board of Directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;

- Upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding those shares owned by persons who
are directors and also officers, and employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer; or

- On or subsequent to such date, the business combination is approved by
the Board of Directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least two-thirds of the outstanding voting stock that is not owned by the
interested stockholder.

Section 203 defines "business combination" to include:

- Any merger or consolidation involving the corporation and the interested
stockholder;

- Any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;

- Subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation
to the interested stockholder; or

- The receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.

In general, Section 203 defines an "interested stockholder" as any entity
or person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person. See "Risk Factors -- Because of
"Anti-Takeover" Provisions in United Therapeutics' Certificate of Incorporation
and Bylaws, A Third Party May Be Discouraged from Making a Takeover Offer Which
Could be Beneficial to United Therapeutics and the Public Stockholders."

LIMITATION OF LIABILITY AND INDEMNIFICATION

United Therapeutics' Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws contain certain provisions permitted under Delaware
law relating to the liability of directors. These provisions eliminate a
director's personal liability for monetary damages

52
<PAGE> 57

resulting from a breach of fiduciary duty, except in circumstances involving
certain wrongful acts, such as:

- For any breach of the director's duty of loyalty to United Therapeutics
or its stockholders;

- For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- For any acts under Section 174 of the Delaware General Corporation Law;
or

- For any transaction from which the director derives an improper personal
benefit.

These provisions do not limit or eliminate United Therapeutics' rights or
any stockholder's rights to seek non-monetary relief, such as an injunction or
rescission, in the event of a breach of director's fiduciary duty. These
provisions will not alter a director's liability under federal securities laws.
In addition, United Therapeutics is entering into separate indemnification
agreements with United Therapeutics' directors that provide the directors
indemnification protection. United Therapeutics believes that these provisions
and agreements will assist it in attracting and retaining qualified individuals
to serve as directors and officers.

TRANSFER AGENT

The transfer agent and registrar for United Therapeutics' common stock is
The Bank of New York.

LISTING

United Therapeutics has applied to have its common stock quoted on the
Nasdaq National Market under the symbol "UTHR."

53
<PAGE> 58

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for United
Therapeutics' common stock. Future sales of substantial amounts of United
Therapeutics' common stock in the public market could adversely affect
prevailing market prices. Furthermore, since no shares will be available for
sale shortly after this offering because of certain contractual and legal
restrictions on resale as described below, sales of substantial amounts of
common stock in the public market after these restrictions lapse could adversely
affect the prevailing market price and United Therapeutics' ability to raise
equity capital in the future.

Upon completion of this offering, United Therapeutics will have outstanding
an aggregate of 15,226,967 shares of common stock, assuming no exercise of the
underwriters' over-allotment option, and excluding 1,174,458 shares issuable
upon exercise of outstanding warrants and options. Of these shares, all of the
shares sold in this offering will be freely tradable without restriction or
further registration under the Securities Act of 1933, unless such shares are
purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act. The remaining 10,726,967 shares of common stock, excluding
1,174,458 shares issuable upon exercise of outstanding warrants and options,
held by existing stockholders are "restricted securities" as that term is
defined in Rule 144 under the Securities Act. Restricted shares may be sold in
the public market only if registered or if they qualify for an exemption from
registration described below under Rules 144, 144(k) or 701 promulgated under
the Securities Act.

Beginning 180 days after the date of this prospectus, approximately
10,412,590 restricted shares subject to lock-up agreements between the
underwriters and certain stockholders, including officers and directors, will
become eligible for sale in the public market under Rule 144(k), Rule 144 or
Rule 701. The lock-up agreements provide that the stockholders will not sell or
otherwise dispose of any shares of common stock without the prior written
consent of BT Alex. Brown Incorporated for a period of 180 days from the date of
this prospectus. Bona fide gifts or distributions to the stockholders or limited
partners of stockholders are excepted from the restrictions of the lock-up
agreements, provided the transferee agrees to be bound by similar restrictions.
BT Alex. Brown Incorporated, may release all or any portion of the securities
subject to the lock-up agreements without notice. See "-- Registration Rights"
and "Underwriting."

Rule 144. Under Rule 144, beginning 90 days after the date the
registration statement of which this prospectus is a part is declared effective,
a person, or persons whose shares are aggregated, who has beneficially owned
restricted shares for at least one year, which includes the holding period of
any prior owner other than an affiliate, would generally be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of:

- 1% of the outstanding shares of United Therapeutics' common stock then
outstanding, which will equal approximately 152,270 shares immediately
after this offering; or

- The average weekly trading volume of United Therapeutics' common stock on
the Nasdaq National Market during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about United Therapeutics.

Rule 144(k). Under Rule 144(k), a person who was not an affiliate of
United Therapeutics at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, which
includes the holding period of any prior owner except an affiliate, is entitled
to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Rule 701. In general, under Rule 701 of the Securities Act, any of the
company's employees, consultants or advisors, other than affiliates, who
purchases or receives shares from

54
<PAGE> 59

the company in connection with a compensatory stock purchase plan or option plan
or other written agreement will be eligible to resell such shares beginning 90
days after the effective date of the registration statement of which this
prospectus is a part, subject only to the manner of sale provisions of Rule 144,
and by affiliates under Rule 144 without compliance with its holding period
requirements.

Registration Rights. Upon completion of this offering, the holders of
797,220 shares of common stock, or their transferees, will be entitled to
certain rights with respect to the registration of such shares under the
Securities Act. When these shares are registered under the Securities Act, they
will be freely tradable unless held by affiliates.

Stock Options. United Therapeutics intends to file a registration
statement under the Securities Act covering 14,939,517 shares of common stock
reserved for issuance under its Amended and Restated Equity Incentive Plan 180
days following completion of this offering. Thereafter, shares which are issued
under the plan will, subject to Rule 144 volume limitations applicable to
affiliates, be available for sale in the open market, beginning approximately
180 days after the effective date of the initial public offering.

55
<PAGE> 60

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives, Deutsche Bank
Securities Inc., A.G. Edwards & Sons, Inc. and Vector Securities International,
Inc. have severally agreed to purchase from United Therapeutics the following
respective numbers of shares of common stock at the initial public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus.

<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERWRITER ---------
<S> <C>
Deutsche Bank Securities Inc................................
A.G. Edwards & Sons, Inc....................................
Vector Securities International, Inc........................

---------
Total.................................................. 4,500,000
=========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions. The underwriters are obligated to purchase all of the
shares of common stock offered hereby, other than those covered by the
over-allotment option described below, if any of such shares are purchased.

The underwriters propose to offer the shares of common stock to the public
at the public offering price set forth on the cover page of this prospectus and
to certain dealers at a price that represents a concession not in excess of
$ per share under the public offering price. The underwriters may allow, and
such dealers may re-allow, a concession not in excess of $ per share to
certain other dealers. After the initial public offering, the offering price and
other selling terms may be changed by the representatives of the underwriters.

United Therapeutics has granted to the underwriters an option, exercisable
not later than 30 days after the effective date of the registration statement of
which this prospectus is a part, to purchase up to 675,000 additional shares of
United Therapeutics common stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus. The underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the common stock offered
hereby. To the extent that the underwriters exercise such option, each of the
underwriters will become obligated, subject to certain conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to 4,500,000, and United Therapeutics will be obligated, pursuant to the option,
to sell such shares to the underwriters to the extent the option is exercised.
If any additional shares of common stock are purchased, the underwriters will
offer additional shares on the same terms as those on which the 4,500,000 shares
are being offered.

56
<PAGE> 61

United Therapeutics has agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.

United Therapeutics' officers, directors and stockholders, have agreed not
to offer, sell, contract to sell or otherwise dispose of or enter into any
transaction which is designed to, or could be expected to, result in the
disposition of any portion of any common stock for period of 180 days after the
effective date of the registration statement of which this prospectus is a part
without the prior written consent of Deutsche Bank Securities Inc. Such consent
may be given at any time without public notice. United Therapeutics has entered
into a similar agreement, except that it may issue shares of common stock
pursuant to the exercise of outstanding options and warrants and it may grant
options to purchase shares of common stock under the Equity Incentive Plan.

The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the common stock. Specifically, the underwriters may over-allot
shares of the common stock in connection with the offering, creating a short
position in the common stock for their own account. Additionally, to cover such
over-allotments or to stabilize the market price of United Therapeutics' common
stock, the underwriters may bid for, and purchase, shares of the common stock in
the open market. Finally, the representatives, on behalf of the underwriters may
also reclaim selling concessions allowed to an underwriter or a dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of the common
stock at a level above that which might otherwise prevail in the open market.
The underwriters are not required to engage in these activities, and if they do,
they may end any of these activities at any time.

PRICING OF THIS OFFERING

Prior to this offering, there has been no public market for United
Therapeutics' common stock. Consequently, the initial public offering price for
the common stock will be determined by negotiation among the representatives of
the underwriters and United Therapeutics. Among the factors to be considered in
determining the public offering price will be:

- The company's results of operations in recent periods;

- The company's present stage of development;

- The market capitalizations and stages of development of other companies
which United Therapeutics and the representatives of the underwriters
believe to be comparable to United Therapeutics;

- Estimates of the company's business potential; and

- Prevailing market conditions.

LAWYERS

The validity of the shares of common stock offered hereby will be passed
upon for United Therapeutics by Bryan Cave LLP, Washington, D.C. James L. Nouss,
Jr., a partner of Bryan Cave LLP, owns 8,333 shares of common stock of United
Therapeutics and is one of three managers of a private investment fund which
owns 133,333 shares of common stock of United Therapeutics. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.

57
<PAGE> 62

EXPERTS

The consolidated balance sheets of United Therapeutics, as of December 31,
1997 and 1998, and the consolidated statements of operations, stockholders'
equity and cash flows for the period from inception on June 26, 1996 to December
31, 1996 and for the years ended December 31, 1997 and 1998 included in this
prospectus and registration statement have been included herein in reliance upon
the report of KPMG LLP, independent certified public accountants, appearing
elsewhere in this prospectus, given on the authority of that firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

United Therapeutics has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a registration statement on Form S-1 under the
Securities Act with respect to the shares of common stock offered hereby. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits and schedule filed therewith. Certain items are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to United Therapeutics and the common stock
offered hereby, reference is made to the registration statement and the exhibits
and schedule filed therewith. Statements contained in this prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. A copy of the
registration statement, and the exhibits and schedule filed therewith, may be
inspected without charge at the public reference facilities maintained by the
Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Commission's regional offices located at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048, and copies of all or any part of
the registration statement may be obtained from such offices upon the payment of
the fees prescribed by the Commission. The public may obtain information on the
operation of the public reference room by calling the Commission at
1-800-SEC-0330. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov. The registration statement, including all exhibits
thereto and amendments thereof, has been filed electronically with the
Commission.

58
<PAGE> 63

UNITED THERAPEUTICS CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of KPMG LLP, Independent Auditors.................... F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998
and March 31, 1999 (unaudited)............................ F-3
Consolidated Statements of Operations for the period from
inception (June 26, 1996) to December 31, 1996, the years
ended December 31, 1997 and 1998 and the three months
ended March 31, 1998 (unaudited) and 1999 (unaudited)..... F-4
Consolidated Statements of Stockholders' Equity for the
period from inception (June 26, 1996) to December 31,
1996, the years ended December 31, 1997 and 1998 and the
three months ended March 31, 1999 (unaudited)............. F-5
Consolidated Statements of Cash Flows for the period from
inception (June 26, 1996) to December 31, 1996, the years
ended December 31, 1997 and 1998 and the three months
ended March 31, 1998 (unaudited) and 1999 (unaudited)..... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 64

INDEPENDENT AUDITORS' REPORT

The Board of Directors
United Therapeutics Corporation:

We have audited the accompanying consolidated balance sheets of United
Therapeutics Corporation and subsidiaries (the Company) as of December 31, 1997
and 1998, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the period from inception (June 26, 1996) to December
31, 1996 and the years ended December 31, 1997 and 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of United
Therapeutics Corporation and subsidiaries as of December 31, 1997 and 1998, and
the results of their operations and their cash flows for the period from
inception (June 26, 1996) to December 31, 1996 and the years ended December 31,
1997 and 1998 in conformity with generally accepted accounting principles.

KPMG LLP

McLean, Virginia
April 2, 1999, except for Note 12,

which is as of June 11, 1999

F-2
<PAGE> 65

UNITED THERAPEUTICS CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1997 1998 1999
---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $5,018,145 $ 6,779,067 $15,429,340
Investments (note 9)........................... -- 10,023,190 --
Accounts receivable............................ -- 53,750 107,500
---------- ----------- -----------
Total current assets........................ 5,018,145 16,856,007 15,536,840
---------- ----------- -----------
Property, plant, and equipment (notes 3 and 8):
Land........................................... -- 134,370 134,370
Building and improvements...................... -- 866,322 965,402
Furniture and equipment........................ 66,489 416,881 444,245
Less - accumulated depreciation................ (14,568) (50,065) (73,847)
---------- ----------- -----------
Property, plant, and equipment, net......... 51,921 1,367,508 1,470,170
---------- ----------- -----------
Certificate of deposit........................... -- 509,506 516,916
Deferred offering costs.......................... -- -- 206,050
Other............................................ 3,603 13,817 34,781
---------- ----------- -----------
Total assets................................ $5,073,669 $18,746,838 $17,764,757
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 383,323 $ 1,707,103 $ 1,735,626
Accrued professional fees...................... 41,931 14,161 229,146
Payroll taxes withheld......................... 27,913 33,629 17,500
Current portion of note payable (note 8)....... -- 4,098 4,189
---------- ----------- -----------
Total current liabilities................... 453,167 1,758,991 1,986,461
Note payable, excluding current portion (note
8)............................................. -- 310,262 309,181
Other liabilities................................ 3,319 1,759 1,339
---------- ----------- -----------
Total liabilities........................... 456,486 2,071,012 2,296,981
---------- ----------- -----------
Commitments and contingencies (notes 5 and 10)
Stockholders' equity (note 6):
Preferred stock, par value $.01, 10,000,000
shares authorized at December 31, 1997 and
1998, and March 31, 1999, no shares
issued...................................... -- -- --
Common stock, par value $.01, 50,000,000 shares
authorized at December 31, 1997 and 1998,
and March 31, 1999, 5,882,833, 10,115,597,
and 10,726,967 shares issued and outstanding
at December 31, 1997 and 1998 and March 31,
1999, respectively (note 12)................ 58,829 101,156 107,270
Additional paid-in capital..................... 7,489,655 32,341,370 43,365,199
Accumulated deficit............................ (2,931,301) (15,766,700) (28,004,693)
---------- ----------- -----------
Total stockholders' equity.................. 4,617,183 16,675,826 15,467,776
---------- ----------- -----------
Total liabilities and stockholders'
equity.................................... $5,073,669 $18,746,838 $17,764,757
========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.
F-3
<PAGE> 66

UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.
F-4
<PAGE> 67

UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, June 26, 1996............................. -- $ -- $ -- $ -- $ --
Issuance of common stock........................... 1,666,663 16,667 83,333 -- 100,000
Net loss........................................... -- -- -- (30,077) (30,077)
---------- -------- ----------- ------------ ------------
Balance, December 31, 1996......................... 1,666,663 16,667 83,333 (30,077) 69,923
Issuance of common stock........................... 3,900,078 39,001 6,881,149 -- 6,920,150
Conversion of loan principal and accrued interest
into common stock................................ 309,428 3,094 505,240 -- 508,334
Stock issued in exchange for services.............. 6,664 67 19,933 -- 20,000
Net loss........................................... -- -- -- (2,901,224) (2,901,224)
---------- -------- ----------- ------------ ------------
Balance, December 31, 1997......................... 5,882,833 58,829 7,489,655 (2,931,301) 4,617,183
Issuance of common stock........................... 4,028,404 40,284 22,864,247 -- 22,904,531
Stock issued in exchange for services.............. 37,694 376 131,709 -- 132,085
Stock issued for exclusive license agreement....... 166,666 1,667 1,498,333 -- 1,500,000
Options and warrants issued for exclusive license
agreements....................................... -- -- 353,000 -- 353,000
Options issued in exchange for services............ -- -- 4,426 -- 4,426
Net loss........................................... -- -- -- (12,835,399) (12,835,399)
---------- -------- ----------- ------------ ------------
Balance, December 31, 1998......................... 10,115,597 101,156 32,341,370 (15,766,700) 16,675,826
Issuance of common stock (unaudited)............... 111,370 1,114 1,994,202 -- 1,995,316
Stock issued for exclusive license agreement
(unaudited)...................................... 500,000 5,000 8,995,000 -- 9,000,000
Options issued in exchange for services
(unaudited)...................................... -- -- 34,627 -- 34,627
Net loss (unaudited)............................... -- -- -- (12,237,993) (12,237,993)
---------- -------- ----------- ------------ ------------
Balance, March 31, 1999 (unaudited)................ 10,726,967 $107,270 $43,365,199 $(28,004,693) $ 15,467,776
========== ======== =========== ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 68

UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
JUNE 26, 1996 THREE MONTHS ENDED
(INCEPTION) TO YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31, --------------------------- ---------------------------
1996 1997 1998 1998 1999
--------------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................... $ (30,077) $ (2,901,224) $(12,835,399) $ (2,263,600) $(12,237,993)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation..................................... 1,168 13,400 35,497 5,929 23,782
Stock issued for exclusive license agreement..... -- -- 1,500,000 -- 9,000,000
Stock and options issued in exchange for
services....................................... -- 20,000 136,511 -- 34,627
Options and warrants issued for exclusive license
agreements..................................... -- -- 353,000 -- --
Interest accrued on convertible loan............. -- 8,334 -- -- --
Write-down of investment......................... -- 110,453 -- -- --
Amortization of discount on investments.......... -- -- (23,229) -- --
Changes in operating assets and liabilities:
Accounts receivable.............................. -- -- (53,750) (4,409) (53,750)
Other assets..................................... (3,721) 118 (10,214) 97 (20,964)
Accounts payable................................. 23,127 363,515 1,323,601 303,268 28,475
Accrued professional fees........................ -- 41,931 (27,770) 64,442 214,985
Payroll taxes withheld........................... 9,353 18,560 5,716 (27,913) (16,129)
------------ ------------ ------------ ------------ ------------
Net cash used in operating activities............ (150) (2,324,913) (9,596,037) (1,922,186) (3,026,967)
------------ ------------ ------------ ------------ ------------
Cash flows used in investing activities:
Purchases of property, plant, and equipment........ (5,838) (60,651) (1,033,953) (22,779) (126,444)
Purchases of investments and certificate of
deposit.......................................... -- (110,453) (10,509,467) -- (7,410)
Sales and maturities of investments................ -- -- -- -- 10,023,190
------------ ------------ ------------ ------------ ------------
Net cash (used in) provided by
investing activities........................... (5,838) (171,104) (11,543,420) (22,779) 9,889,336
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock............. 100,000 6,920,150 22,904,531 2,450,034 1,995,316
Proceeds from convertible loan..................... -- 500,000 -- -- --
Payments of principal on note payable.............. -- -- (2,771) -- (990)
Principal payments under capital lease
obligations...................................... -- -- (1,381) (330) (372)
Deferred offering costs............................ -- -- -- -- (206,050)
------------ ------------ ------------ ------------ ------------
Net cash provided by financing activities........ 100,000 7,420,150 22,900,379 2,449,704 1,787,904
------------ ------------ ------------ ------------ ------------
Net increase in cash and cash equivalents........ 94,012 4,924,133 1,760,922 504,739 8,650,273
Cash and cash equivalents, beginning of period...... -- 94,012 5,018,145 5,018,145 6,779,067
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents, end of period............ $ 94,012 $ 5,018,145 $ 6,779,067 $ 5,522,884 $ 15,429,340
============ ============ ============ ============ ============
Supplemental schedule of noncash investing and
financing activities:
Note payable issued for building................... $ -- $ -- $ 317,131 $ -- $ --
============ ============ ============ ============ ============
Loan principal and accrued interest converted into
common stock..................................... $ -- $ 508,334 $ -- $ -- $ --
============ ============ ============ ============ ============
Supplemental cash flow information -- cash paid for
interest........................................... $ -- $ -- $ 14,570 $ 140 $ 6,972
============ ============ ============ ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-6
<PAGE> 69

UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 pharmaceutical
company based in Silver Spring, Maryland and Research Triangle Park, North
Carolina, that is focused on clinical development and commercialization of
in-licensed compounds for the treatment of life-threatening diseases
characterized by high chronic care costs. The initial focus of the Company is
the development of therapies to treat patients with pulmonary hypertension, a
generally fatal disorder of the pulmonary arteries with no adequate long-term
therapies. All of the Company's products are currently in clinical trial
programs.

The Company has three wholly owned subsidiaries: LungRx, Unither
Pharmaceuticals, Inc. (UPI) and Unither Telemedicine Services Corporation
(UTSC). UPI and UTSC were formed in 1998. None of these subsidiaries have
commenced operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the financial statements of
United Therapeutics Corporation and its three wholly owned subsidiaries. All
significant intercompany balances were eliminated in combination.

UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION

The interim consolidated financial statements of the Company for the three
months ended March 31, 1998 and 1999 included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations relating to interim financial statements. In the opinion of
management, the accompanying unaudited interim consolidated financial statements
reflect all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of the Company at March 31,
1998 and 1999, and the results of its operations and its cash flows for the
three months ended March 31, 1998 and 1999.

CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments with original
maturities of three months or less. Cash equivalents consist of money market
funds and certificates of deposit and amount to $4,960,748, $6,769,034, and
$6,286,683 at December 31, 1997 and 1998 and March 31, 1999, respectively.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets.

F-7
<PAGE> 70
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Estimated useful lives of the assets are as follows:

<TABLE>
<S> <C>
Building and improvements................................... 39 years
Furniture and equipment..................................... 3-7 years
</TABLE>

RESEARCH AND DEVELOPMENT

Research and product development costs are expensed as incurred.

LICENSED TECHNOLOGY

Costs incurred in obtaining the license rights to technology in the
research and development stage are expensed as incurred and in accordance with
the specific contractual terms of the applicable license agreements.

INCOME TAXES

Income taxes are accounted for in accordance with Financial Accounting
Standards Board Statement No. 109 (SFAS No. 109). Under the asset and liability
method of SFAS No. 109, deferred tax assets and liabilities are determined based
on the differences between the financial reporting and the tax bases of assets
and liabilities and are measured using the tax rates and laws that are expected
to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.

INVESTMENTS

The Company's only investment at December 31, 1998 is considered a
held-to-maturity security. Held-to-maturity securities are those securities
which the Company has the ability and intent to hold until maturity and are
recorded at amortized cost, adjusted for the amortization or accretion of
premiums or discounts. Premiums and discounts are amortized or accreted over the
life of the related held-to-maturity security as an adjustment to yield using
the effective interest method.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, investments, accounts
payable and payroll taxes withheld approximate fair value due to their short
maturities. The fair value of the Company's note payable (see note 8) is
estimated to be the carrying amount, since it is an adjustable rate note.

LOSS PER COMMON SHARE

Basic loss per common share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding during the year.
Common stock equivalents, consisting of options and warrants, are not included
in the calculation as their effect would be anti-dilutive. Accordingly, diluted
loss per common share is the same as basic loss per common share.

F-8
<PAGE> 71
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.

STOCK OPTION PLAN

The Company applies the provisions of SFAS No. 123, Accounting for
Stock-Based Compensation, to account for its stock options. SFAS No. 123 allows
companies to continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income and pro forma earnings per share disclosures for employee
stock option grants made in 1996 and subsequent years as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has elected to
apply the provisions of APB Opinion No. 25 and provide the pro forma disclosures
of SFAS No. 123. The Company accounts for non-employee stock option awards in
accordance with SFAS No. 123.

GRANT REVENUE

Grant revenues in 1996 and 1997 resulted primarily from a grant from the
PPH Cure Foundation (see note 3). Grant revenues in 1998 and 1999 resulted from
an orphan drug grant from the United States Food and Drug Administration (the
FDA orphan drug grant) to fund ongoing research related to UT-15. The FDA orphan
drug grant is a cost reimbursement award covering a two-year period beginning
September 30, 1998. The FDA has committed funding for the first year totaling
$215,000. This grant has no milestones or significant deliverables other than
the submission of periodic technical reports. The Company recognizes revenues
under the FDA orphan drug grant when they are realizable and earned and only to
the extent allowable expenses are incurred. Recognized revenues are not
contingent upon future performance obligations and are not refundable to the FDA
since they represent reimbursements for past services and are not dependent on
the outcome of the research. Accounts receivable at December 31, 1998 and March
31, 1999 were for unbilled costs incurred and are expected to be billed and
collected in the second quarter of 1999. Amounts billed are subject to audit by
the FDA and could result in potential disallowances. Such disallowances, if any
are not expected to be material.

DEFERRED OFFERING COSTS

Costs incurred in connection with the Company's initial public offering are
deferred and reported as assets in the accompanying balance sheets. Upon
successful completion of the initial public offering, these deferred offering
costs will be netted against the additional paid-in capital resulting from the
offering.

CONCENTRATIONS OF SUPPLIERS

The Company currently relies on three suppliers for the formulation and
manufacture of its lead compound, UT-15, on a single supplier to test the purity
and stability of each batch of UT-15, and a single supplier for the delivery
device to administer UT-15 to patients. Although there are a limited number of
companies that could replace each of these suppliers, management believes that
other suppliers could provide similar services and materials. A change in
suppliers, however, could cause a delay in formulation, manufacture, and
distribution of UT-15, and in the

F-9
<PAGE> 72
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

conduct of clinical trials, which would adversely affect the Company's research
and development efforts.

Similarly, the Company relies solely on Toray for the manufacture of
beraprost and solely on Global Medical Enterprises for the manufacture of UT-77
under exclusive licensing agreements (see note 4). If these agreements were to
terminate, the Company would have no other source for these compounds.

3. RELATED PARTY TRANSACTIONS

REVENUE

During 1996 and 1997, the Company earned substantially all of its revenue
from a grant from the PPH Cure Foundation (the Foundation). A director of the
Foundation is also the Chairman and CEO of the Company. This grant terminated at
the end of March 1997. Total revenue earned from the Foundation's grant was
$153,972 and $115,909 for the period ended December 31, 1996 and the year ended
December 31, 1997, respectively.

CONVERTIBLE LOAN

In 1997, the Chairman and CEO loaned the Company $500,000. The principal
and accrued interest, totaling $508,334 based on an interest rate of 10 percent,
were converted on August 19, 1997 into 309,428 shares of common stock under the
terms of the loan agreement. The conversion price was approximately $1.62 per
share.

BUILDING

In 1998, the Company purchased an office building for its corporate
headquarters from Beacon Projects, Inc., an entity owned by the Company's
Chairman and CEO. The purchase price, including related expenses, was
approximately $581,000.

OFFICE LEASES

During 1997 and 1998, the Company leased office space from Beacon Projects,
Inc., a company owned by the Chairman and CEO of the Company. In August 1998,
this lease was terminated when the Company purchased the office building from
the Chairman and CEO of the Company. Payments made by the Company under this
lease totaled $15,000 and $12,000 for the years ended December 31, 1997 and
1998, respectively, and $4,500 and $0 for the quarters ending March 31, 1998 and
1999, respectively.

In March 1999, Unither Telemedicine Services Corporation leased office
space from Beacon Projects, Inc. (see note 10).

LEGAL SERVICES

During 1996, 1997 and 1998, the Company obtained professional services from
a law firm affiliated with the Chairman and CEO and two executive officers. The
Company incurred expenses of approximately $5,000, $81,000 and $157,000 during
the period ended December 31, 1996 and during years ended December 31, 1997 and
1998, respectively, for services rendered by the law firm. The Company incurred
expenses of approximately $50,000 and $107,000 during the quarters ended March
31, 1998 and 1999, respectively, for services rendered by the law firm.

F-10
<PAGE> 73
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RESEARCH AGREEMENT

During 1998, the Company entered into a cooperative drug discovery
agreement with William Harvey Research Limited (WHR) (see note 5). The Chairman
and CEO of the Company is president of William Harvey Medical Research
Foundation, an affiliate of WHR. Payments made to WHR under the agreement were
approximately $162,000 for the year ended December 31, 1998 and $86,000 for the
quarter ended March 31, 1999.

4. LICENSE AGREEMENTS

GLAXO WELLCOME ASSIGNMENT

In January 1997, Glaxo Wellcome Inc. assigned to the Company patents and
patent applications for the use of the stable prostacyclin analog now known as
UT-15 for the treatment of pulmonary hypertension and congestive heart failure.
Glaxo Wellcome has a right to negotiate a license from the Company if the
Company decides to license any part of the marketing rights to a third party.
Glaxo Wellcome waived this right with respect to the agreement with MiniMed
described below. Under the agreement, Glaxo Wellcome is entitled to certain
royalties from the Company for a period of ten years from the date of the first
commercial sale of any product containing UT-15 (see note 5). If the Company
grants to a third party any license to UT-15, Glaxo Wellcome is also entitled to
a percentage of all consideration payable to the Company by such licensee. The
Company is responsible for all patent prosecution and maintenance for UT-15.

PHARMACIA & UPJOHN LICENSE

In December 1996, Pharmacia & Upjohn Company exclusively licensed to the
Company patents and a patent application for the composition and production of
the stable prostacyclin analog now known as UT-15. Under the Pharmacia & Upjohn
agreement, the Company paid an initial license fee and must make additional
milestone payments of up to $3,875,000 for orphan and non-orphan indications of
the compound. The Company will make royalty payments between 2.5 and 5.0 percent
of net sales, subject to reduction based on required royalty payments to Glaxo
Wellcome, to Pharmacia & Upjohn until the later of the expiration of the
applicable patent or ten years after the date of the first commercial sale of a
product in a country defined as a milestone country under the agreement. The
agreement may be terminated earlier by either party in certain circumstances,
including upon a material breach by or bankruptcy of the other party, and by the
Company at any time upon 60 days' notice to Pharmacia & Upjohn. Pursuant to the
agreement, the Company is obliged to use its best efforts to conduct a research
and development program in the United States relating to the use of the product
containing the compound for at least one indication, and to obtain regulatory
approvals and market a product in the United States and such other countries as
the Company deems appropriate.

MINIMED INC.

The Company entered into an agreement with MiniMed in September 1997 to
collaborate in the design, development, and implementation of therapies to treat
pulmonary hypertension and peripheral vascular disease utilizing MiniMed
products and UT-15. The term of the agreement is for seven years after the FDA
grants a new drug approval for UT-15 and will be automatically extended for
additional 12-month periods unless otherwise terminated. The agreement is
subject to early termination in the event of a material breach or bankruptcy of
either party. The Company and MiniMed have established a Management Committee
comprised of two representatives from

F-11
<PAGE> 74
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

each company to implement the agreement. MiniMed has agreed to establish a
dedicated sales force for UT-15 for advanced pulmonary hypertension. The Company
has agreed to pay MiniMed the greater of a percentage of the revenues derived
from commercial sales of UT-15 (see note 5) or $5,000 per patient per year.

TORAY INDUSTRIES LICENSES

In September 1998, United Therapeutics entered into an agreement with Toray
Industries, Inc. obtaining the exclusive right to develop and market beraprost
in the United States and Canada for the treatment of pulmonary vascular disease,
including pulmonary hypertension, plus certain additional rights of first
refusal for other products, therapies or territories. In exchange, United
Therapeutics paid Toray cash and 166,666 shares of common stock, and granted
Toray an option to purchase an additional 166,666 shares of common stock at an
exercise price of $9.00 per share (see note 6). United Therapeutics also agreed
to pay Toray milestone payments of up to $750,000. In March 1999, United
Therapeutics entered into an agreement with Toray obtaining the exclusive right
to develop and market beraprost in the United States and Canada for the
treatment of peripheral vascular disease. United Therapeutics paid Toray cash
and 500,000 shares of common stock and agreed to pay Toray milestone payments of
up to $750,000. License fees expensed as research and development totaled
$1,785,000 for the year ended December 31, 1998 and $9,100,000 for the quarter
ended March 31, 1999.

Pursuant to the agreements, United Therapeutics has agreed to pay all costs
and expenses associated with undertaking clinical trials, obtaining regulatory
approvals and commercializing beraprost in the United States and Canada for the
treatment of pulmonary hypertension and peripheral vascular disease. Toray has
retained all manufacturing rights for beraprost. United Therapeutics has agreed
to purchase beraprost solely from Toray at specified prices based on volume. The
agreements each set forth a product development schedule. In the event that
development by United Therapeutics falls significantly behind the schedule
specified in either agreement, Toray may terminate that agreement. Furthermore,
United Therapeutics is responsible under the agreements for achieving minimum
annual product net sales as determined in advance by mutual agreement, and in
the case of the first two years of commercial sales, minimum net sales of $2.5
million and $5 million. In the event that United Therapeutics is unable to meet
any minimum annual net sales requirement for two consecutive years, Toray may
convert the exclusive license to a non-exclusive license. United Therapeutics
would then be required to share any product marketing rights approved by the FDA
with a third-party licensee chosen by Toray. Each agreement expires 10 years
following FDA approval of beraprost for the particular disease indication.
United Therapeutics may extend each agreement for unlimited 12-month periods
with Toray's consent.

CORTECH LICENSE

In November 1998, United Therapeutics entered into an agreement with
Cortech, Inc. to obtain the exclusive right to develop and market a serine
elastase inhibitor compound, now known as UT-77, for all indications worldwide,
except for certain dermatological uses. In exchange, United Therapeutics made a
cash payment and granted Cortech a warrant to purchase 116,666 shares of common
stock, which vests only if United Therapeutics continues developing UT-77 after
November 2, 2000, and terminates in November 2004 (see note 6), and agreed to
make milestone payments in the event it elects to develop UT-77 after November
2, 2000 of up to $6,450,000 for non-orphan drug indications and pay royalty fees
between 6 and 10 percent of UT-77 net sales. License fees expensed as research
and development totaled $418,000 for the year

F-12
<PAGE> 75
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ended December 31, 1998. Pursuant to the agreement, United Therapeutics is
required to use reasonable efforts to develop and conduct research and
pre-clinical and human clinical trials to obtain all regulatory approvals to
manufacture, market and commercialize the products that United Therapeutics
determines are commercially feasible. In addition, United Therapeutics is
responsible for a majority of the costs for prosecuting and maintaining the
patent covering UT-77. United Therapeutics may choose to discontinue the
development of the products without penalty upon written notice to Cortech if
the products do not satisfy United Therapeutics' clinical needs for targeted
indications. If United Therapeutics terminates the agreement, however, Cortech
will receive an exclusive royalty-free license to use any improvements,
know-how, data, information or regulatory filings or any other intellectual
property arising from United Therapeutics' performance under the agreement.
Cortech may terminate the agreement if United Therapeutics does not commence
Phase II clinical trials of UT-77 before May 2001, subject to certain
exceptions.

GLOBAL MEDICAL ENTERPRISES AGREEMENT

In February 1999, United Therapeutics entered into an agreement with Global
Medical Enterprises Ltd. and Global Medical Enterprises Ltd., LLC. This
agreement gives to United Therapeutics the exclusive right to commercialize and
sell Ketotop in the United States, Canada, Mexico, Central America and the
Caribbean for treatment of all indications. Global Medical holds these rights
under an exclusive sales and distribution agreement with Pacific
Pharmaceuticals, Inc., the Korean manufacturer of Ketotop. Both the agreement
between United Therapeutics and Global Medical and the agreement between Global
Medical and Pacific Pharmaceuticals expire in July 2008. The agreement between
United Therapeutics and Global Medical will be extended if Pacific
Pharmaceuticals extends its agreement with Global Medical. The agreement is
subject to early termination in the event of a material breach or bankruptcy of
either party or if the underlying agreement between Global Medical and Pacific
Pharmaceuticals is terminated. United Therapeutics has agreed to purchase
Ketotop solely from Global Medical. United Therapeutics will pay Global Medical
a product purchase price equal to Global Medical's cost of obtaining Ketotop
from Pacific Pharmaceuticals plus a profit percentage of between 15 and 23
percent. United Therapeutics and Global Medical will jointly determine Global
Medical's compensation for sales in additional territories. United Therapeutics
is obligated under its agreement with Global Medical to obtain trademark
protection on behalf of Pacific Pharmaceuticals for Ketotop in every
jurisdiction where United Therapeutics has marketing rights. The Company expects
these costs to be immaterial.

5. COMMITMENTS

CLINICAL TRIALS AND OTHER RESEARCH

The Company has contracted with universities and research organizations to
perform clinical trials and other research related to UT-15 and other products.
The Company generally pays all expenses incurred in carrying out the clinical
trials and research activities. Total expenses under these agreements were
approximately $0, $1,700,000 and $7,600,000 in 1996, 1997, and 1998,
respectively. Total expenses for the quarters ended March 31, 1998 and 1999 were
approximately $1,400,000 and $2,200,000, respectively. Total payments under
these agreements in 1999 are not expected to exceed $13,000,000.

F-13
<PAGE> 76
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

UNIVERSITY COLLEGE LONDON

In 1997, the Company entered into a cooperative drug discovery agreement
with University College London (UCL) to identify and develop compounds with
therapeutic effectiveness against pulmonary hypertension and other diseases
treatable by potassium channel compounds. The agreement may be terminated by the
Company if the Company decides not to fund further drug development. Annual
funding by the Company is expected to be between $500,000 and $1,000,000 over
the next several years. Under the agreement, the Company is required to pay UCL
a royalty equal to a percentage of net sales and license fees that the Company
earns from discoveries and products developed by UCL. This royalty obligation
extends for 15 years or, if later, until any issued patents expire.

WILLIAM HARVEY RESEARCH LIMITED

In 1998, the Company entered into a cooperative drug discovery agreement
with William Harvey Research Limited (WHR) to identify and develop an antisense
therapy as a potential treatment for pulmonary hypertension. Funding by the
Company under this agreement is expected to be between $600,000 and $700,000
annually over the next 30 months. The agreement may be terminated by the Company
after 30 months. Under the agreement, the Company is required to pay WHR a
royalty equal to a percentage of net sales and license fees that the Company
earns from discoveries developed by WHR. This royalty obligation extends for 15
years or, if later, until any issued patents expire.

MILESTONE AND ROYALTY PAYMENTS

The Company has in-licensed certain products under agreements described in
note 4. These agreements generally include milestone payments to be paid in cash
by the Company upon the achievement of certain product development and
commercialization goals set forth in each agreement. Total milestone payments
under these agreements may come due approximately as follows:

<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31,
1999........................................................ $ 250,000
2000........................................................ 1,275,000
2001........................................................ 550,000
2002........................................................ 3,200,000
2003........................................................ 4,500,000
</TABLE>

Additionally, certain agreements described in note 4 require the Company to
pay royalties. The royalties are generally based on a percentage of net sales or
other product fees earned by the Company. Royalties will become due when sales
are generated and will range from 2.5 to 30 percent of net product revenues as
defined in the respective agreements.

EMPLOYMENT AGREEMENT

In April 1999, the Company executed an employment agreement with its CEO.
The agreement establishes minimum compensation and benefits for an initial
period of five years. The agreement also requires the Company to issue options
to the CEO at the end of each of the next five years to purchase a number of
shares of common stock equal to one percent of the increase

F-14
<PAGE> 77
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in the Company's market capitalization after the initial public offering over
the prior year, divided by 18, subject to certain annual limitations. The
exercise price of the options will be 110 percent of the fair market value of a
share of common stock on the date of grant, or 100 percent of fair market value
if the CEO owns less than 10 percent of the Company's outstanding common stock
on the date of grant. If the CEO is terminated without cause or leaves with good
reason, she will receive severance equal to three years of base salary plus the
value of any vested options.

6. STOCKHOLDERS' EQUITY

COMMON STOCK

The Company was originally capitalized through the issuance of 1,666,663
shares of common stock for $0.06 per share, with a par value of $0.01. In 1997,
the number of authorized shares of common stock was increased from 20,000,000 to
50,000,000 shares. Also in 1997, 4,209,506 shares of common stock were issued at
prices ranging from $1.20 to $3.00. Of this total, 309,428 shares were issued as
a result of the conversion of a loan and accrued interest thereon from the
Chairman and CEO of the Company totalling $508,334.

On December 7, 1997, the Company's board of directors approved a
one-for-two reverse stock split of the Company's common stock. All common shares
and per share amounts in the accompanying financial statements have been
retroactively adjusted to reflect this reverse stock split. Authorized shares
and the par values of common and preferred stock were not affected.

In 1998, the Company issued 4,028,404 shares of common stock for cash at
prices ranging from $3.00 to $18.00.

The Company sold 111,370 shares of common stock in January and February
1999 at a price of $18.00 per share.

In April 1999, the Company's Board of Directors and shareholders approved
an amendment to the Company's Certificate of Incorporation, which will become
effective upon consummation of the initial public offering, increasing the
number of authorized shares of common stock to 100,000,000 shares.

PREFERRED STOCK

A total of 10,000,000 shares of preferred stock with a par value of $0.01
were authorized in 1997. No preferred stock has been issued.

STOCK AND OPTIONS ISSUED FOR EXCLUSIVE LICENSE AGREEMENTS AND IN EXCHANGE
FOR SERVICES

In 1998 the Company issued 166,666 shares of common stock and options to
purchase 166,666 shares of common stock in exchange for an exclusive license
agreement. The stock was valued at $1,500,000, based on prices of similar
quantities of stock sold to unrelated parties during the period. The options
have an exercise price of $9.00 per share, are exercisable immediately, and
expire 30 days following the date of the Company's first filing of a New Drug
Application in the United States for the licensed product. The fair value of the
options was estimated on the date of grant at $185,000 using the Black-Scholes
option pricing model with assumptions generally consistent with those used for
employee options. The total of $1,685,000 was expensed as research and
development expense.

F-15
<PAGE> 78
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1998, the Company issued warrants to purchase 116,666 shares of common
stock in exchange for an exclusive license agreement. The warrants have an
exercise price of $9.00 per share, are exercisable beginning in November 2000,
and expire in November 2004.
The fair value of the warrants was estimated on the date of grant at $168,000
using the Black-Scholes option pricing model with assumptions generally
consistent with those used for employee options and was expensed as research and
development expense.

The Company issued a total of 37,694 shares of common stock in recognition
of consulting services rendered during the year ended December 31, 1998. The
stock's fair value and related compensation expense (ranging from $3.00 to
$9.00) per share was estimated based on prices of similar quantities of stock
sold to unrelated parties during the period.

In March 1999 the Company issued 500,000 shares of common stock in exchange
for another exclusive license agreement. The stock was valued at $9,000,000
($18.00 per share) by the Company based on recent sales at $18.00 per share. The
total of $9,000,000 was expensed as a research and development expense.

EMPLOYEE OPTIONS

The Company's Board of Directors adopted an equity incentive plan (the
Plan) effective November 12, 1997. On April 5, 1999 and April 8, 1999, the
Company's Board of Directors and shareholders approved an amendment and
restatement of the Plan to increase the total number of shares of common stock
that may be issued pursuant to the Plan to 14,939,517 shares, including
7,939,517 shares reserved for issuance to the CEO under her employment agreement
(see note 5). The Plan provides for the grant of awards, including options,
stock appreciation rights, restricted stock awards and other rights as defined
in the Plan, to eligible participants. Options granted under the Plan are not
transferable and must generally be exercised within 10 years. The price of all
options granted under the Plan must be at least equal to the fair market value
of the common stock on the date of grant. With respect to any participant who
owns 10 percent or more of the Company's outstanding common stock on the date of
grant, the exercise price of any incentive stock option granted to that
participant must equal or exceed 110 percent of the fair market value of the
common stock on the date of grant and the option must not be exercisable for
longer than five years. During the year ended December 31, 1997, options to
purchase a total of 274,000 shares were granted under this Plan at exercise
prices of $3.00 to $16.50. For the year ended December 31, 1998 and quarter
ended March 31, 1999, options to purchase a total of 610,401 shares and 5,500
shares, respectively, were granted under this Plan at exercise prices of $3.00
to $19.80.

Additional options have been granted to employees outside of the Plan which
have terms between five and ten years.

F-16
<PAGE> 79
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company applies APB Opinion No. 25 in accounting for options granted to
employees and, accordingly, no compensation expense has been recognized in the
financial statements with respect to such options. Had the Company determined
compensation expense under SFAS No. 123 based on the fair value at the grant
date for its stock options, the Company's net loss would have been increased to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 26, 1996) YEAR ENDED THREE MONTHS ENDED
TO DECEMBER 31, MARCH 31,
DECEMBER 31, -------------------------- --------------------------
1996 1997 1998 1998 1999
--------------- ----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net loss:
As reported............................. $(30,077) $(2,901,224) $(12,835,399) $(2,263,600) $(12,237,993)
Pro forma............................... (30,077) (2,905,862) (12,989,645) (2,263,775) (12,247,017)
Basic and diluted loss per common share:
As reported........................... $ (0.02) $ (0.87) $ (1.54) $ (0.38) $ (1.19)
Pro forma............................. $ (0.02) $ (0.87) $ (1.56) $ (0.38) $ (1.19)
-------- ----------- ------------ ----------- ------------
</TABLE>

The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions generally used for grants in 1998 and quarter ending March 31, 1999:
dividend yield of 0 percent, expected volatility of 0.10 percent, risk free
interest rate of 4.73 and 5.30 percent, respectively, and expected lives of 7.5
years.

A summary of the status of the Company's employee stock options as of
December 31, 1997 and 1998 and March 31, 1999, and changes during the years and
period then ended is presented below:

<TABLE>
<CAPTION>
1997 1998 MARCH 31, 1999
------------------- ------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- --------- ------- --------- ------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of period.... -- $ -- 274,000 $13.77 878,485 $12.69
Granted............................... 274,000 13.77 610,401 12.12 5,500 18.00
Exercised............................. -- -- -- -- -- --
Forfeited............................. -- -- (5,916) 3.00 (2,000) 3.00
------- ------ ------- ------ ------- ------
Outstanding at end of period.......... 274,000 $13.77 878,485 $12.69 881,985 $12.75
======= ====== ======= ====== ======= ======
Options exercisable at end of
period.............................. 21,250 $ 7.80 180,318 $ 8.28 182,385 $ 8.40
======= ====== ======= ====== ======= ======
Weighted-average fair value of options
granted during the period........... $ 0.06 $ 3.30 $ 4.83
======= ======= =======
</TABLE>

The following table summarizes information about stock options outstanding
at December 31, 1998:

F-17
<PAGE> 80
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
REMAINING EXERCISE EXERCISE
EXERCISE PRICES NUMBER CONTRACTUAL LIFE PRICE NUMBER PRICE
--------------- ------- ---------------- --------- ------- ---------
<C> <S> <C> <C> <C> <C> <C>
$ 3.00 ................ 141,818 5.7 $ 3.00 68,318 $ 3.00
9.00 ................ 236,000 5.2 9.00 68,333 9.00
15.00 ................ 150,667 8.9 15.00 30,333 15.00
16.50 ................ 66,667 8.9 16.50 13,334 16.50
18.00 ................ 200,000 10.0 18.00 -- --
19.80 ................ 83,333 10.0 19.80 -- --
------------- ------- ------- ------- ------- -------
$3.00 - 19.80 ................ 878,485 7.75 $ 12.69 180,318 $ 8.28
============= ======= ======= ======= ======= =======
</TABLE>

The following table summarizes information about stock options outstanding
at March 31, 1999 (unaudited):

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
REMAINING EXERCISE EXERCISE
EXERCISE PRICES NUMBER CONTRACTUAL LIFE PRICE NUMBER PRICE
--------------- ------- ---------------- --------- ------- ---------
<C> <S> <C> <C> <C> <C> <C>
$ 3.00 ................ 139,818 5.41 $ 3.00 68,485 $ 3.00
9.00 ................ 236,000 4.98 9.00 68,333 9.00
15.00 ................ 150,667 8.65 15.00 30,333 15.00
16.50 ................ 66,667 8.65 16.50 13,334 16.50
18.00 ................ 205,500 9.75 18.00 1,900 18.00
19.80 ................ 83,333 9.75 19.80 -- --
------------- ------- ------- ------- ------- -------
$3.00 - 19.80 ................ 881,985 7.52 $ 12.75 182,385 $ 8.40
============= ======= ======= ======= ======= =======
</TABLE>

In addition to options issued to employees, the Company also issued options
to consultants during the year ended December 31, 1998 and the quarter ended
March 31, 1999. A total of 6,333 shares and 9,141 shares, with exercise prices
of $15.00 to $18.00, were outstanding at December 31, 1998 and March 31, 1999,
respectively.

F-18
<PAGE> 81
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

A reconciliation of tax benefit computed at the statutory federal tax rate
on losses from operations before income taxes to the actual income tax expense
is as follows:

F-19
<PAGE> 82
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the net effect of net operating loss
carryforwards and the temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. Significant components of the Company's deferred tax assets
as of December 31, 1997 and 1998 and March 31, 1999, respectively, are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1997 1998 1999
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........... $ 973,412 $ 4,245,686 $ 8,922,662
General business credit.................... -- 3,640,146 4,296,104
Cumulative effect of using cash basis
accounting for income tax purposes...... 165,311 690,302 726,943
Furniture and equipment principally due to
differences in depreciation............. 159 (19,164) (24,028)
Nonqualifed stock options.................. -- 146,610 160,970
----------- ----------- ------------
Total deferred tax assets............... 1,138,882 8,703,580 14,082,651
Valuation allowance.......................... (1,138,882) (8,703,580) (14,082,651)
----------- ----------- ------------
Net deferred tax assets................. $ -- $ -- $ --
=========== =========== ============
</TABLE>

Based on the weight of available evidence, management has determined that
it is more likely than not that the entire deferred tax asset amount will not be
realized. This is due primarily to the uncertainty of product approvals, future
product sales and profitability. The valuation allowance for deferred tax assets
increased $1,127,859 and $7,564,698 for the years ended December 31, 1997 and
1998, respectively, and $5,379,071 for the period ended March 31, 1999.

At December 31, 1998, the Company had net operating loss carryforwards of
approximately $11,000,000 and business tax credit carryforwards of approximately
$3,600,000 for federal income tax purposes which expire at various dates from
2011 through 2018. The respective amounts at March 31, 1999 were approximately
$22,400,000 and $4,300,000. Business tax credits can offset future tax
liabilities and arise from qualified research expenditures. As a result of past
financings and the contemplated initial public offering, the Company has not
experienced and will not experience ownership changes as defined by the rules
enacted with the Tax Reform Act of 1986 that would limit the Company's ability
to use its net operating loss and tax credit carryforwards.

8. NOTE PAYABLE

On April 29, 1998, the Company purchased an office building from a company
owned by the Chairman and CEO of the Company for approximately $581,000. At that
time, the Company assumed an existing adjustable rate mortgage on the building
of approximately $318,000. The mortgage currently bears an interest rate of 8.75
percent, and is payable in monthly installments through 2022. The mortgage is
collateralized by the deed of trust on the building.

F-20
<PAGE> 83
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum principal payments under the note payable are as follows:

<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31,
1999........................................................ $ 4,098
2000........................................................ 4,471
2001........................................................ 5,305
2002........................................................ 5,788
2003........................................................ 5,809
2004 and thereafter......................................... 288,889
--------
314,360
Less current portion........................................ (4,098)
--------
$310,262
========
</TABLE>

9. INVESTMENTS

Investments at December 31, 1997 consisted of an equity investment in a
joint venture totalling $110,453 which was carried at the lower of cost or net
realizable value. Due to the speculative nature of this investment, it was
deemed to have no realizable value for financial statement purposes, and was
written down to $0 in 1997. During 1998, the Company terminated its involvement
in the joint venture. No amounts were recovered.

Investments at December 31, 1998 consisted of a single debt security issued
by the Federal Home Loan Mortgage Corporation. This security matured at its face
value of $10,049,000 on January 20, 1999. Its fair value at December 31, 1998
was $10,025,887. Its amortized cost was $10,023,190, with gross unrealized
holding gains of $25,810, for the year ended December 31, 1998. After maturing
on January 20, 1999, the face value of $10,049,000 was deposited into a money
market account.

10. LEASES

The Company leases office space for use in its research and development
activities in North Carolina. The initial leases commenced in 1997 and had
initial terms of six months. The leases are renewable semi-annually and were
renewed in 1998.

In March 1999, a subsidiary of the Company leased office space from a
company owned by the Chairman and CEO of the Company (see note 3). The lease
expires in 2001 and may be extended for two years. The subsidiary is responsible
for base rentals and its proportionate share of common utilities and
maintenance. Also in March 1999, the Company leased an automobile for

F-21
<PAGE> 84
UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

its CEO. Approximate minimum annual rent payments due under these noncancelable
leases are as follows:

<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31,
1999........................................................ $30,000
2000........................................................ 39,000
2001........................................................ 12,000
2002........................................................ 3,000
</TABLE>

Total rent expense for the period ended December 31, 1996 and the years
ended December 31, 1997 and 1998 was $0, $25,340 and $97,033, respectively.
Total rent expenses for the quarters ended March 31, 1998 and 1999 were
approximately $19,000 and $38,000, respectively.

11. INITIAL PUBLIC OFFERING

In April 1999, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission for the sale
of up to 6,000,000 shares of common stock. Direct costs associated with the
offering have been deferred and will be recorded as a reduction of stockholders'
equity if the offering is consummated. If the offering is not consummated, the
deferred offering costs will be charged to operations.

12. REVERSE STOCK SPLIT AND INCREASE IN AUTHORIZED COMMON STOCK

In April 1999, the Company's Board of Directors approved a one-for-three
reverse stock split of its outstanding common stock which was effected on June
11, 1999. Authorized shares and the par values of common and preferred stock
were not affected by the reverse split. All share and per share amounts in the
accompanying financial statements have been retroactively adjusted to reflect
the reverse stock split for all periods presented.

On June 11, 1999, the Company increased the total number of authorized
shares of common stock to 100,000,000.

F-22
<PAGE> 85

------------------------------------------------------------
------------------------------------------------------------

YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. UNITED
THERAPEUTICS HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
SALE OF COMMON STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS
CORRECT AFTER THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY
CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.

---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 1
Risk Factors............................ 5
Use of Proceeds......................... 14
Capitalization.......................... 15
Dilution................................ 16
Selected Consolidated Financial Data.... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 18
Business................................ 22
Management.............................. 40
Certain Transactions.................... 49
Principal Stockholders.................. 50
Description of Capital Stock............ 51
Shares Eligible for Future Sale......... 54
Underwriting............................ 56
Lawyers................................. 57
Experts................................. 58
Additional Information.................. 58
Index to Consolidated Financial
Statements............................ F-1
</TABLE>

---------------------

DEALER PROSPECTUS DELIVERY OBLIGATION:
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
4,500,000 Shares

[UNITED THERAPEUTICS CORPORATION LOGO]

Common Stock
------------------

PROSPECTUS
------------------

DEUTSCHE BANC ALEX. BROWN

A.G. EDWARDS & SONS, INC.

VECTOR SECURITIES INTERNATIONAL, INC.

, 1999

------------------------------------------------------------
------------------------------------------------------------
<PAGE> 86

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All the amounts are estimates except for
the registration fee, the Nasdaq listing fee and the NASD filing fee.

<TABLE>
<S> <C>
Registration fee............................................ $ 23,978
Nasdaq National Market listing fee.......................... 95,000
NASD filing fee............................................. 9,125
Blue sky qualification fees and expenses.................... *
Printing and engraving expenses............................. 200,000
Legal fees and expenses..................................... 400,000
Accounting fees and expenses................................ 225,000
Transfer agent and registrar fees........................... *
Directors' and Officers' Insurance.......................... *
Miscellaneous............................................... 196,897
----------
Total............................................. $1,150,000
==========
</TABLE>

- ---------------
* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted by Delaware law, the Registrant's Amended and Restated
Certificate of Incorporation provides that no director of the Registrant will be
personally liable to the Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (a) for any breach
of duty of loyalty to United Therapeutics or to its stockholders, (b) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law, or (d) for any transaction from which the director derived an
improper personal benefit.

The Registrant's Amended and Restated Certificate of Incorporation further
provides that the Registrant must indemnify its directors and executive officers
and may indemnify its other officers and employees and agents to the fullest
extent permitted by Delaware law. The Registrant believes that indemnification
under its Amended and Restated Certificate of Incorporation covers negligence
and gross negligence on the part of indemnified parties.

The Registrant has entered into indemnification agreements with each of its
directors and officers. These agreements, among other things, require the
Registrant to indemnify such directors and officers for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred by
any such person in any action or proceeding, including any action by or in the
right of the Registrant, arising out of such person's services as a director or
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant.

The Underwriting Agreement (Exhibit 1) will provide for indemnification by
the underwriters of the Registrant, its directors, its officers who sign the
registration statement, and the Registrant's controlling persons for certain
liabilities, including liabilities arising under the Securities Act.
II-1
<PAGE> 87

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since June 1996, the Registrant has sold and issued the following
unregistered securities:

(1) As of March 31, 1999, the Registrant had granted stock options to
purchase 168,905 shares of its common stock to employees, consultants and
directors pursuant to its Amended and Restated Equity Incentive Plan. Of these
options to purchase, no shares have been exercised, 7,916 have been canceled,
and the remainder are outstanding.

(2) As of March 31, 1999, the Registrant had granted stock options to
purchase an additional 730,137 shares of its common stock to employees,
consultants and directors, all of which are outstanding.

(3) In August 1996, the Registrant issued an aggregate of 1,666,663 shares
of its common stock to its four co-founders for an aggregate consideration of
$100,000.

(4) From January 1, 1997 through December 31, 1997, the Registrant issued
3,906,742 shares of common stock for an aggregate consideration of $6,940,150.

(5) In July 1997, the Registrant issued 309,428 shares of its common stock
to Martine A. Rothblatt, in consideration for the conversion of a note,
including accrued interest thereon, for an aggregate consideration of $508,334.

(6) From January 1, 1998 through December 31, 1998, the Registrant issued
37,194 shares of its common stock in consideration for various consulting
services valued at approximately $132,085.

(7) From January 1, 1998 through December 31, 1998, the Registrant issued
an aggregate of 3,473,349 shares of its common stock to directors and officers
and several accredited investors (not including those reflected in item (6)) for
an aggregate cash consideration of $17,904,530.

(8) In September 1998, the Registrant issued 166,666 shares of its common
stock, and granted options to acquire an additional 166,666 shares of common
stock in consideration of an exclusive license.

(9) In October 1998, the Registrant issued an aggregate of 555,555 shares
of common stock to two accredited investors for an aggregate consideration of
$5,000,001.

(10) In November 1998, the Registrant issued warrants to purchase 116,666
shares of common stock in consideration of an exclusive license agreement.

(11) In March 1999, the Registrant issued 500,000 shares of its common
stock in consideration of an exclusive license agreement.

(12) In March 1999, the Registrant issued options to purchase 2,808 shares
of its common stock in exchange for services.

(13) From January 1999 to February 1999, the Registrant sold and issued an
aggregate of 111,370 shares of its common stock to directors, employees and
several accredited investors for an aggregate cash consideration of $1,995,316.

The sales and issuances of securities described in paragraph (1) above were
deemed to be exempt from registration under the Securities Act by virtue of Rule
701 of the Securities Act in that they were offered and sold either pursuant to
a written compensatory benefit plan or pursuant to a written contract relating
to compensation, as provided by Rule 701. The sales and issuances of securities
described in paragraphs (2)-(13) above were deemed to be exempt from
registration under the Securities Act by virtue of Rule 4(2), Regulation D or
Regulation S promulgated thereunder.

Appropriate legends are affixed to the stock certificates issued in the
aforementioned transactions. Similar legends were imposed in connection with any
subsequent sales of any such securities. All recipients either received adequate
information about the Registrant or had access, through employment or other
relationships, to such information.
II-2
<PAGE> 88

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The following is a list of exhibits filed as a part of this
registration statement. All of the exhibits have been previously filed except
for Exhibit 3.1, Exhibit 5, Exhibit 10.1, Exhibit 10.10 and Exhibit 23.1.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
1 Form of Equity Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
3.2 Amended and Restated By-Laws of the Registrant.
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.
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.
4.4 Warrant to purchase shares of United Therapeutics' common
stock, issued on November 2, 1998 to Cortech, Inc.
4.5 Stock Option Grant to purchase shares of United
Therapeutics' common stock, issued on September 16, 1998 to
Toray Industries, Inc.
5 Opinion of Bryan Cave LLP.
10.1 Amended and Restated Equity Incentive Plan.
10.2 Form of Scientific Advisor Compensation Agreement.
10.3 Executive Employment Agreement (as amended) dated as of
April 2, 1999 between the Registrant and Martine A.
Rothblatt.
10.4 Employment Agreement dated July 15, 1996 between the
Registrant and James W. Crow.
10.5 Employment Agreement dated April 7, 1997 between the
Registrant and Gilles Cloutier.
10.6 Employment Agreement dated August 1, 1996 between the
Registrant and Shelmer Blackburn, Jr.
10.7 First Flight Venture Lease Agreement dated July 1, 1997
between North Carolina Technological Development Authority,
Inc. and the Registrant.
10.8 Exclusive License Agreement dated as of December 3, 1996
between the Registrant and affiliate of Pharmacia & Upjohn
Company.**
10.9 Assignment Agreement dated as of January 31, 1997 between
the Registrant and affiliates of Glaxo Wellcome Inc.**
10.10 Cooperation and Strategic Alliance Agreement dated as of
September 3, 1997 between the Registrant and MiniMed Inc.**
10.11 Exclusive License Agreement dated as of September 24, 1998
between the Registrant and Toray Industries, Inc.**
10.12 Exclusive License Agreement dated as of November 4, 1998
between the Registrant and Cortech, Inc.**
10.13 Exclusive License and Distribution Agreement dated as of
February 4, 1999 among the Registrant, Global Medical
Enterprises Ltd. and Global Medical Enterprises Ltd., LLC.**
10.14 Exclusive License Agreement dated as of March 15, 1999
between the Registrant and Toray Industries, Inc.**
</TABLE>

II-3
<PAGE> 89

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.15 Manufacturing Agreement dated as of February 11, 1998
between the Registrant and Steroids, Ltd.**
10.16 Lease dated as of March 1, 1999 between the Unither
Telemedicine Services Corp. and Beacon Projects, Inc.
10.17 UAI Technology, Inc. Office Lease dated as of July 1, 1998
between the Registrant and UAI Technology, Inc.
10.18 Form of Indemnification Agreement between the Registrant and
each of its Directors.
21 Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP.
23.2 Consent of Bryan Cave LLP. Reference is made to Exhibit 5.
24 Powers of Attorney.
27 Financial Data Schedule.
</TABLE>

- -------------------------
* To be filed by amendment.

** United Therapeutics has requested confidential treatment for certain portions
of this exhibit pursuant to Rule 406 of the Securities Act of 1933, as
amended.

ITEM 17. UNDERTAKINGS.

The Registrant hereby undertakes to provide the underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will governed by the final adjudication of such issue.

The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act, the information omitted from the form of
prospectus filed as part of the registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared effective, and
(2) for the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-4
<PAGE> 90

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement on Form S-1 to be signed
on its behalf by the undersigned, in the City of Silver Spring, County of
Montgomery, State of Maryland on the 11th day of June, 1999.

UNITED THERAPEUTICS CORPORATION

By: /s/ MARTINE A. ROTHBLATT
-------------------------------------------------
Martine A. Rothblatt
Chairman of the Board and Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed below by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MARTINE A. ROTHBLATT Chairman of the Board and June 11, 1999
- --------------------------------------------- Chief Executive Officer
Martine A. Rothblatt

/s/ MARTINE A. ROTHBLATT* President, Chief Operating June 11, 1999
- --------------------------------------------- Officer and Director
James W. Crow

/s/ MARTINE A. ROTHBLATT* Chief Financial Officer, June 11, 1999
- --------------------------------------------- Chief Accounting Officer,
Gilles Cloutier Executive Vice President,
Treasurer and Director

/s/ MARTINE A. ROTHBLATT* Director of Operations, June 11, 1999
- --------------------------------------------- Secretary and Director
Shelmer D. Blackburn, Jr.

/s/ MARTINE A. ROTHBLATT* Director June 11, 1999
- ---------------------------------------------
Jean-Guy Lambert
</TABLE>

<TABLE>
/s/ MARTINE A. ROTHBLATT* Director June 11, 1999
- ---------------------------------------------
Noah A. Samara
<C> <S> <C>
/s/ MARTINE A. ROTHBLATT* Director June 11, 1999
- ---------------------------------------------
David Gooray

/s/ MARTINE A. ROTHBLATT* Director June 11, 1999
- ---------------------------------------------
Olivia Giscard d'Estaing
</TABLE>

* By Martine A. Rothblatt pursuant to power of attorney dated April 15,
1999.

II-5
<PAGE> 91

EXHIBIT INDEX

<TABLE>
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the
Registrant
5 Opinion of Bryan Cave LLP.
10.1 Amended and Restated Equity Incentive Plan
10.10 Cooperation and Strategic Alliance Agreement dated as of
September 3, 1997 between the Registrant and MiniMed Inc.**
23.1 Consent of KPMG LLP.
23.2 Consent of Bryan Cave LLP. Reference is made to Exhibit 5.
</TABLE>

- -------------------------

** United Therapeutics has requested confidential treatment for certain portions
of this exhibit pursuant to Rule 406 of the Securities Act of 1933, as
amended.

<PAGE> 1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
UNITED THERAPEUTICS CORPORATION

It is hereby certified that:

1. The present name of the corporation (hereinafter called the
"corporation") is United Therapeutics Corporation. The name under which the
corporation was originally incorporated was Lung Rx, Inc.; and the date of
filing the original certificate of incorporation of the corporation with the
Secretary of State of the State of Delaware is June 26, 1996.

2. The certificate of incorporation is hereby amended in its entirety
as set forth in the Restated Certificate of Incorporation hereinafter provided
for.

3. The provisions of the certificate of incorporation of the
corporation as heretofore amended and/or supplemented, and as herein amended,
are hereby restated and integrated into the single instrument which is
hereinafter set forth, and which is entitled Amended and Restated Articles of
Incorporation of United Therapeutics Corporation.

4. The amendments and the restatement of the certificate of
incorporation herein certified have been duly adopted by the stockholders in
accordance with the provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.

5. The certificate of incorporation of the corporation, as amended and
restated herein, shall at the effective time of this amended and restated
certificate of incorporation, which shall be the date of filing hereof,
read as follows:

ARTICLE I

The name of the corporation (hereinafter referred to as the
"Corporation") is United Therapeutics Corporation.

ARTICLE II

The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name and address of the Registered
agent is Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington Delaware.

ARTICLE III

The period of duration of the Corporation is perpetual.

<PAGE> 2

ARTICLE IV

The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law ("DGCL").

ARTICLE V

(a) The total number of shares of capital stock of all classes
which the Corporation shall have the authority to issue is One Hundred Ten
Million (110,000,000) shares, consisting of One Hundred Million (100,000,000)
shares of Common Stock, par value $.01 per share, and Ten Million (10,000,000)
shares of Preferred Stock, par value $.01 per share.

(b) The designations, voting powers, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions of the above classes of stock are as follows:

(i) Subject to the limitations hereinafter contained and to
the requirements of the laws of the State of Delaware, authority is
hereby vested in the Board of Directors of the Corporation to issue
from time to time said Ten Million (10,000,000) shares of Preferred
Stock in one or more series, with such voting powers, full or limited,
or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in the
resolution or resolutions providing for the issuance of such stock
adopted by the Board of Directors. Without limiting the generality of
the foregoing, in the resolution or resolutions providing for the
issuance of such shares of each particular series of Preferred Stock,
subject to the limitations hereinafter contained and to the
requirements of the laws of the State of Delaware, the Board of
Directors is also expressly authorized:

(A) to fix the distinctive serial designation of the
shares of any such series;

(B) to fix the consideration for which the shares of
any such series are to be issued;

(C) to fix the rate or amount per annum, if any, at
which the holders of the shares of any such series shall be
entitled to receive dividends, the dates on which such
dividends shall be payable, whether the dividends shall be
cumulative or noncumulative, and if cumulative, to fix the
date or dates from which such dividends shall be cumulative;

(D) to fix the price or prices at which, the times
during which, and the other terms, if any, upon which the
shares of any such series may be redeemed;

(E) to fix the rights, if any, which the holders of
shares of any such series have in the event of dissolution or
upon distribution of the assets of the Corporation;

2
<PAGE> 3

(F) to determine whether the shares of any such
series shall be made convertible into or exchangeable for
other securities of the Corporation, including shares of the
Common Stock of the Corporation or shares of any other series
of the Preferred Stock of the Corporation, now or hereafter
authorized, or any new class of preferred stock of the
Corporation hereafter authorized, the price or prices or the
rate or rates at which conversion or exchange may be made, and
the terms and conditions upon which any such conversion right
or exchange right shall be exercised;

(G) to determine whether a sinking fund shall be
provided for the purchase or redemption of shares of any
series and, if so, to fix the terms and amount or amounts of
such sinking fund;

(H) to determine whether the shares of any such
series shall have voting rights, and, if so, to fix the voting
rights of the shares of such series; and

(I) to fix such other preferences and rights
privileges and restrictions applicable to any such series as
may be permitted by law.

(ii) Subject to the prior rights of the holders of any shares
of Preferred Stock, the holders of the Common Stock shall be entitled
to receive, to the extent permitted by law, such dividends as may be
declared from time to time by the Board of Directors.

In the event of any voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the Corporation, after the
holders of the Preferred Stock then outstanding, if any, shall have received the
full preferential amounts to which such holders may be entitled upon such
voluntary or involuntary liquidation, dissolution, distribution of assets or
winding up, the holders of Common Stock shall be entitled, to the exclusion of
such holders of the Preferred Stock then outstanding, to receive all the
remaining assets of the Corporation of whatever kind available for distribution
to stockholders, ratably in proportion to the number of shares of Common Stock
held by them respectively. A consolidation, merger or reorganization of the
Corporation with any other corporation or corporations, or a sale of all or
substantially all of the assets of the Corporation, shall not be considered a
dissolution, liquidation or winding up of the Corporation within the meaning of
the immediately preceding sentence.

Except as may otherwise by required by law, the By-Laws of the
Corporation or this Certificate of Incorporation, each holder of Common Stock
shall be entitled to one vote for each share of Common Stock held of record in
the name of such stockholder on all matters voted upon by the stockholders,
including the election of directors.

(c) The Corporation hereby declares that, as of the effective
date of filing of this Amended and Restated Certificate of Amendment, each three
outstanding shares of the Corporation's Common Stock, par value $.01 per share
be converted and reconstituted into one share of Common Stock, par value $.01
per share. No fractional shares shall be issued upon such conversion and
reconstitution, and the number of shares of Common Stock to be issued shall be

3
<PAGE> 4

rounded down to the nearest whole share.

ARTICLE VI

All preemptive rights of shareholders are hereby denied, so
that no shares of capital stock of the Corporation of any class whether now or
hereafter authorized and no other security of the Corporation shall carry with
it and no holder or owner of any share or shares of capital stock of the
Corporation of any class whether now or hereafter authorized or of any other
security of the Corporation shall have any preferential or preemptive right to
acquire additional shares of capital stock of the Corporation of any class
whether now or hereafter authorized or of any other security of the Corporation.

All cumulative voting rights are hereby denied, so that none
of the capital stock of the Corporation of any class whether now or hereafter
authorized or of any other security of the Corporation shall carry with it and
no holder or owner of any share or shares of capital stock of the Corporation of
any class whether now or hereafter authorized or of any other security of the
Corporation shall have any right to cumulative voting in the election of
directors or for any other purpose.

The foregoing provisions are not intended to modify or
prohibit any provisions of any voting trust or agreement between or among
holders or owners of shares of stock or other securities.

ARTICLE VII

(a) Except as may be otherwise provided by law or in this
Certificate of Incorporation, the business and affairs of the Corporation shall
be managed under the direction of the Board of Directors. The number of
directors of the Corporation shall be fixed by, or in the manner provided in,
the By-Laws of the Corporation. In furtherance and not in limitation of the
powers conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered:

(i) to make, alter, amend or repeal the By-Laws of
the Corporation in any manner not inconsistent with the laws
of the State of Delaware or this Certificate of Incorporation,
subject to the power of the stockholders, at the time entitled
to vote, to alter, amend or repeal By-Laws made by the Board
of Directors;

(ii) to fix from time to time the amount of net
profits of the Corporation or of its surplus to be reserved as
working capital or for any other lawful purpose;

(iii) to authorize and issue obligations of the
Corporation, secured or unsecured, and to include therein such
provisions as to redemption, conversion or other terms thereof
as the Board of Directors in its sole discretion may
determine, and to authorize the mortgaging or pledging, as
security therefor, of any property of the Corporation, real or
personal, including after-acquired property;

4
<PAGE> 5

(iv) to determine whether any, and if any, what part,
of the net profits of the Corporation or of its surplus shall
be declared in dividends and paid to the stockholders, and to
direct and determine the use and disposition of such net
profits or such surplus; and

(v) from time to time, without the vote or assent of
the stockholders, to issue additional shares of authorized
Common Stock.

In addition to the powers and authorities herein or by law
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware,
of this Certificate of Incorporation and of the By-Laws of the Corporation.

(b) No contract or other transaction of the Corporation shall
be affected by the fact that any of the directors of the Corporation are in any
way interested in or connected with any other party to such contract or
transaction, or are themselves parties to such contract or transaction, provided
that at the meeting of the Board of Directors or of the committee there of
authorizing or confirming such contract or transaction there shall be present a
quorum of directors not so interested or connected, and such contract or
transaction shall be approved by a majority of such quorum, which shall consist
of directors not so interested or connected.

(c) The Board of Directors shall be divided into three
classes, designated Class I, Class II and Class III, as nearly equal in number
as the then total number of directors constituting the whole Board permits. If
the number of directors is changed, any increase or decrease shall be
apportioned by the Board of Directors among the three classes so that the number
in each class shall be as nearly equal as possible. The term of office of each
class shall expire at the third annual meeting of stockholders for election of
directors following the election of such class, except that the initial term of
office of the Class I directors shall expire at the annual meeting of
stockholders in 2000, the initial term of office of the Class II directors shall
expire at the annual meeting of stockholders in 2001 and the initial term of
office of the Class III directors shall expire at the annual meeting of
stockholders in 2002. At each annual meeting of the stockholders of the
Corporation, the successors of the class of directors whose term expires at such
meeting shall be elected to hold office for a term expiring as of the third
succeeding annual meeting.

ARTICLE VIII

(a) The Corporation shall to the fullest extent permitted by
the laws of Delaware as the same now or may hereafter exist, indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he or she is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and

5
<PAGE> 6

reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful. To the extent that a director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in this subsection (a) of
this ARTICLE VIII or in defense of any claim, issue or matter therein, he or she
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.

(b) Any indemnification required under subsection (a) of this
ARTICLE VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in subsection (a) of this ARTICLE
VIII. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.

(c) Expenses (including attorneys' fees) incurred by an
officer or a director in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as authorized in or pursuant to this ARTICLE
VIII.

(d) The indemnification and advancement of expenses provided
by, or granted pursuant to paragraph (c) of this ARTICLE VIII shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors, the By-Laws of the Corporation or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.

(e) Without limiting the provisions of this ARTICLE VIII, the
Corporation is authorized from time to time, without further action by the
stockholders of the Corporation, to enter into agreements with any director or
officer of the Corporation providing such rights of indemnification as the
Corporation may deem appropriate, up to the maximum extent permitted by law. Any
agreement entered into by the Corporation with a director may be authorized by
the other directors, and such authorization shall not be invalid on the basis
that similar agreements may have been or may thereafter be entered into with
other directors.

6
<PAGE> 7

(f) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this ARTICLE VIII.

(g) The indemnification and advancement of expenses provided
by, or granted pursuant to, this ARTICLE VIII shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.

(h) For purposes of this ARTICLE VIII, references to a
corporation shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which if its separate existence had continued, would
have had power and authority to indemnify its directors or officers so that a
person who is or was a director or officer of such constituent corporation, or
is or was serving at the request of such constituent corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
ARTICLE VIII with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.

(i) For purposes of this ARTICLE VIII, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director or officer of the Corporation which
imposes duties on, or involves services by such director or officer with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he or she reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this ARTICLE VIII.

(j) Persons who are not covered by the foregoing provisions of
this ARTICLE VIII and who are or were employees or agents of the Corporation, or
are or were serving at the request of the Corporation as employees or agents of
another corporation, partnership, joint venture, trust or other enterprise, may
be indemnified to the fullest extent permitted by the laws of Delaware as the
same now or may hereafter exist or to such lesser extent as the Board of
Directors of the Corporation, in its discretion, may from time to time deem
appropriate.

ARTICLE IX

Except as otherwise provided in this Certificate of
Incorporation, any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation and may not be effected

7
<PAGE> 8

by consent in writing by such stockholders. A special meeting of stockholders
may be called only by the Board of Directors pursuant to a resolution adopted by
the affirmative vote of a majority of the entire Board of Directors or by the
Chairman of the Board of Directors, a Vice Chairman of the Board of Directors or
the President.

ARTICLE VIII

Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors.

ARTICLE XI

A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director except (i) for breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions), or (iv) for any transaction from which the director derived an
improper personal benefit. Should the DGCL be amended hereafter so as to expand
or limit the liability of a director, then the liability of a director of the
Corporation shall be so expanded to the fullest extent required or so limited to
the fullest extent permitted by such amendment without the need for amendment of
this Certificate of Incorporation or further action on the part of the
stockholders of the Corporation.

* * * * * *

8
<PAGE> 9

IN WITNESS WHEREOF, said United Therapeutics Corporation, has
caused this certificate to be signed by its Chief Executive Officer and
Assistant Secretary, this 11th day of April, 1999.

UNITED THERAPEUTICS CORPORATION

BY /s/ Martine Rothblatt
-----------------------------
Martine Rothblatt, Chief
Executive Officer

ATTEST:

BY /s/ Paul A. Mahon
-------------------
Paul A. Mahon, Assistant Secretary

<PAGE> 1
EXHIBIT 5

BRYAN CAVE LLP

700 THIRTEENTH STREET, N. W.
WASHINGTON, D. C. 20005-3960

June 11, 1999

Board of Directors
United Therapeutics Corporation
1110 Spring Street
Silver Spring, MD 20910

Ladies and Gentlemen:

We have acted as special counsel to United Therapeutics
Corporation, a Delaware corporation (the "Company"), in connection with the
filing of the Registration Statement on Form S-1, No. 333-76409 (the
"Registration Statement") of the Company with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), covering the offering and sale of up to 4,500,000 shares
(plus 675,000 shares subject to the underwriters' over-allotment option) of the
Company's common stock, $.01 par value (the "Shares"). The Shares are proposed
to be sold on the terms and conditions set forth in an underwriting agreement,
by and among the Company, Deutsche Bank Securities Inc., A. G. Edwards & Sons,
Inc. and Vector Securities International, Inc. as representatives of the several
underwriters named therein (the "Underwriting Agreement").

In connection therewith, we have examined and relied without
investigation as to matters of fact upon the Registration Statement,
certificates of public officials, statements and certificates of officers of the
Company, and originals or copies certified to our satisfaction of the Amended
and Restated Certificate of Incorporation and Amended and Restated Bylaws of the
Company, minutes of meetings of the Board of Directors of the Company and such
other corporate records, documents, certificates and instruments as we have
deemed necessary or appropriate in order to enable us to render the opinions
expressed below.

In rendering this opinion, we have assumed the genuineness of
all signatures on all documents examined by us, the authenticity of all
documents submitted to us as originals and the conformity to authentic originals
of all documents submitted to us as certified or photostatted copies. We have
also assumed the due authorization, execution and delivery of all documents.

Based on the foregoing and in reliance thereon, we are of the
opinion that:

1. The Company has been duly incorporated and is in good
standing under the laws of the State of Delaware.

<PAGE> 2
United Therapeutics Corporation
June 11, 1999
Page 2

2. The Shares are duly authorized and, when sold in accordance
with the terms set forth in the Underwriting Agreement, will be validly issued,
fully paid and non-assessable.

This opinion is not rendered with respect to any laws other
than the laws of the State of Delaware.

We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement and to the use of our name under the caption
"Lawyers" in the prospectus filed as a part thereof. We also consent to your
filing copies of this opinion as an exhibit to the Registration Statement with
agencies of such states as you deem necessary in the course of complying with
the laws of such states regarding the offering and sale of the Shares.

Very truly yours,

/s/ Bryan Cave LLP

BRYAN CAVE LLP

<PAGE> 1

Exhibit 10.1

UNITED THERAPEUTICS CORPORATION
AMENDED AND RESTATED EQUITY INCENTIVE PLAN

(As amended effective April 9, 1999)

<PAGE> 2

ARTICLE I
PURPOSE

1.1 General.

The purpose of the United Therapeutics Corporation Equity Incentive
Plan (the "Plan") is to promote the success, and enhance the value, of United
Therapeutics Corporation (the "Company"), by linking the personal interests of
its qualified directors, officers and other key employees to those of Company
stockholders and by providing its qualified directors, officers and other key
employees with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of employees upon whose judgment, interest, and
special effort the successful conduct of the Company's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from time
to time to selected directors, officers and key employees.

ARTICLE 2
EFFECTIVE DATE

2.1 Effective Date.

The Plan was originally effective November 12, 1997, subject to
approval by the stockholders of the Company, which approval was duly obtained.
Amendments to the Plan were approved by the Board of Directors on April 9, 1999,
subject to the approval of the stockholders of the Company. The Plan as so
amended and restated will be deemed to be approved by the stockholders if it
receives the approval of the holders of a majority of the shares of stock of the
Company in accordance with the applicable provisions of the Laws of the State of
Delaware and the By-laws of the Company. Any Awards granted under the Plan as so
amended prior to stockholder approval are effective when made (unless the
Committee specifies otherwise at the time of grant), but no Award may be
exercised or settled and no restrictions relating to any Award may lapse before
stockholder approval. If the stockholders fail to approve the Plan as amended
within twelve (12) months of April 9, 1999, any Award previously made pursuant
to the amended Plan shall be automatically canceled without any further act.

ARTICLE 3
DEFINITIONS

3.1 Definitions.

When appearing in this Plan with the initial letter capitalized, and
the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section or in Sections 1.1
or 2.1, unless a clearly different meaning is required by the context. The
following words and phrases shall have the following meanings:

(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, or Performance Share Award, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.

(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.

2
<PAGE> 3

(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

(e) "Committee" means the committee of the Board described in Article
4.

(f) "Company" means United Therapeutics Corporation.

(g) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Company, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in
the judgment of the Committee, is permanent and continuous in nature.
The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of the Participant's
condition. Such disability determination shall be made in accordance
with Code section 22(e)(3).

(h) "Effective Date" has the meaning assigned such term in Section 2.1.

(i) "Fair Market Value" means with respect to Stock or any other
property, the fair market value of such Stock or other property
determined by such methods or procedures as may be established from
time to time by the Committee.

(j) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.

(k) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.

(l) "Option" means a right granted to a Participant under the Plan to
purchase Stock at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified Stock
Option.

(m) "Participant" means a person who, as a director, officer or key
employee of the Company, has been granted an Award under the Plan.

(n) "Performance Award" means a right granted to a Participant under
Article 9 to receive cash, Stock, or other Awards, the payment of which
is contingent upon achieving certain performance goals established by
the Committee (includes "Performance Shares" and "Performance Units").

(o) "Performance Share" means a right granted to a Participant under
Article 9 to receive shares of Company Stock, the payment of which is
contingent upon achieving certain performance goals.

(p) "Performance Units" means a right granted to a Participant under
Article 9 to receive units the value of which is equivalent to $1.00,
the payment of which is contingent upon achieving certain performance
goals.

(q) "Plan" means the United Therapeutics Corporation Amended and
Restated Equity Incentive Plan, as it may be further amended from time
to time.

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(r) "Restricted Stock Award" means Stock granted to a Participant under
Article 10 that is subject to certain restrictions and to risk of
forfeiture.

(s) "Retirement" means a Participant's termination of employment with
the Company after attaining any normal or early retirement age
specified in any pension, profit sharing or other retirement program
sponsored by the Company.

(t) "Stock" means the United Therapeutics Corporation par value common
stock of the Company and such other securities of the Company as may be
substituted for Stock pursuant to Article 12.

(u) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of the
date of exercise of the SAR and the grant price of the SAR, as
determined pursuant to Article 8.

(v) "1933 Act" means the Securities Act of 1933, as amended from time
to time.

(w) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.

ARTICLE 4
ADMINISTRATION

4.1 Committee.

The Plan shall be administered by the Compensation Committee of the
Board. The Committee shall consist of two or more members of the Board who are
(i) "outside directors" as that term is used in Section 162 of the Code and the
regulations promulgated thereunder, and (ii) "non-employee directors," as such
term is defined for purposes of Rule 16b-3 promulgated under Section 16 of the
1934 Act or any successor provision, except as may be otherwise permitted under
Section 16 of the 1934 Act and the rules and regulations promulgated thereunder.

4.2 Action by the Committee.

For purposes of administering the Plan, the following rules of
procedure shall govern the Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting who are, at which a quorum is present and acts approved in writing by a
majority of the Committee in lieu of a meeting shall be deemed the acts of the
Committee. Each member of the Committee is entitled, in good faith, to rely or
act upon any report or other information furnished to that member by any officer
or other employee of the Company, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.

4.3 Authority of Committee.

The Committee has the exclusive power, authority and discretion to:

(a) Designate Participants;

(b) Determine the type or types of Awards to be granted to each
Participant;

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<PAGE> 5

(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, based
in each case on such considerations as the Committee in its sole
discretion determines;

(e) Determine whether, to what extent, and under what circumstances an
Award may be granted, or the exercise price of an Award may be paid in
(cash, Stock, other Awards, or other property), or an Award may be
canceled, forfeited, or surrendered;

(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

(g) Decide all other matters that must be determined in connection with
an Award;

(h) Establish, adopt or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan; and

(i) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan.

4.4 Decisions Binding.

The Committee is hereby granted discretionary authority to construe and
interpret the provisions of the Plan. The Committee's interpretation of the
Plan, any Awards granted under the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.

ARTICLE 5
SHARES SUBJECT TO THE PLAN

5.1 Number of Shares.

Subject to adjustment as provided in Section 12.1, the aggregate number
of shares of Stock reserved and available for Awards, except with respect to
Options granted pursuant to Section 7.3, shall be 7,000,000. Subject to
adjustment as provided in Section 12.1, the aggregate number of shares of Stock
reserved and available for the Options granted pursuant to Section 7.3 shall be
7,939,517.

5.2 Lapsed Awards.

To the extent that an Award is canceled, terminates, expires or lapses
for any reason, any shares of Stock subject to the Award will again be available
for the grant of an Award under the Plan and shares subject to SARs or other
Awards settled in cash will be available for the grant of an Award under the
Plan.

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<PAGE> 6

5.3 Stock Distributed.

Any Stock distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Stock, treasury Stock or Stock purchased on the
open market.

5.4 Limitation on Number of Shares Subject to Awards.

Notwithstanding any provision in the Plan to the contrary, the maximum
number of shares of Stock with respect to one or more Awards that may be
granted to one or more Participants over any one calendar year period during
the term of the Plan shall not exceed 500,000 in the aggregate; provided,
however, that the maximum number of shares of Stock with respect to an Option
granted to the Chief Executive Officer pursuant to Section 7.3 in 2000 shall
not exceed 500,000; in 2001 shall not exceed 701,353; in 2002 shall not exceed
681,434; in 2003 shall not exceed 2,757,832; and in 2004 shall not exceed
3,298,898.

ARTICLE 6
ELIGIBILITY

6.1 General.

Awards may be granted only to individuals who are directors (including
non-employee directors), officers or other key employees (including employees
who also are directors or officers) of or consultants to the Company, as
determined by the Committee.

ARTICLE 7
STOCK OPTIONS

7.1 General.

The Committee is authorized to grant Options to Participants in such
amounts as it deems appropriate in its discretion and subject to such conditions
and based on such criteria as it may deem advisable (including performance based
criteria or conditions) consistent with the other terms of the Plan and the
following:

(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee.

(b) Time and Conditions of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions,
if any, that must be satisfied before all or part of an Option may be
exercised.

(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements), and the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants. Without limiting the power and discretion conferred on
the Committee pursuant to the preceding sentence, the Committee may, in
the exercise of its discretion, but need not, allow a Participant to
pay the Option price by directing the Company to withhold from the
shares of Stock that would otherwise be issued upon exercise of the
Option that number of shares

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<PAGE> 7

having a Fair Market Value on the exercise date equal to the Option
price, all as determined pursuant to rules and procedures established
by the Committee.

(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award
Agreement shall include such provisions as may be specified by the
Committee.

(e) Dividend Equivalents. Any Option may provide for the payment of
dividend equivalents to the Participant on a current, deferred or
contingent basis or may provide that Dividend Equivalents be credited
against the option price. The right to Dividend Equivalents, if so
provided, shall be evidenced in the Award Agreement.

7.2 Incentive Stock Options.

The terms of any Incentive Stock Options granted under the Plan must
comply with the following additional rules:

(a) Exercise Price. Subject to Section 7.2 (e) below, the exercise
price per share of Stock shall be set by the Committee, provided that
the exercise price for any Incentive Stock Option shall not be less
than the Fair Market Value as of the date of the grant.

(b) Exercise. Subject to Section 7.2(e) below, in no event may any
Incentive Stock Option be exercisable for more than ten (10) years from
the date of its grant.

(1) The Incentive Stock Option shall lapse three months after
the Participant's termination of employment, if the
termination of employment was (i) attributable to Retirement
or (ii) for any other reason, provided that the Committee has
approved, in writing, the continuation of any Incentive Stock
Option outstanding on the date of the Participant's
termination of employment.

(2) If the Participant becomes disabled within the meaning of
Disability under Section 3.1(g) of the Plan, then the Option
will lapse twelve (12) months after employment ceased due to
the Disability.

(3) If the Participant separates from employment other than as
provided in paragraph (1) or (2), the Incentive Stock Option
shall lapse at the time of the Participant's termination of
employment.

(5) If the Participant dies before the Option lapses pursuant
to paragraph (1), (2) or (3) or before its original expiration
as indicated above, the Incentive Stock Option shall lapse,
unless it is previously exercised, on the date on which the
Option would have lapsed had the Participant lived and had his
employment status (i.e., whether the Participant was employed
by the Company on the date of his death or had previously
terminated employment) remained unchanged. Upon the
Participant's death, any exercisable Incentive Stock Options
may be exercised by the Participant's legal representative or
representatives, by the person or persons entitled to

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<PAGE> 8

do so under the Participant's last will and testament, or, if
the Participant shall fail to make testamentary disposition of
such Incentive Stock Options or shall die intestate, by the
person or persons entitled to receive such Incentive Stock
Options under the applicable laws of descent and distribution.

(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined at the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.

(e) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of
stock of the Company unless the exercise price per share of such Option
is at least 110% of the Fair Market Value per share of Stock at the
date of grant and the Option expires no later than five (5) years after
the date of grant.

(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the original Effective Date (i.e.,
November 12, 19977).

(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.

(h) Grants only to Employees. Incentive Stock Options may be granted
only to employees of the Company.

7.3 Incentive Stock Option Grants to Chief Executive Officer

Pursuant to the terms of the Executive Employment Agreement entered
into by and between the Company and its Chief Executive Officer, dated April 5,
1999, as amended, the Company shall make annual grants of Incentive Stock
Options to the Chief Executive Officer. The number of shares subject to each
Incentive Stock Option shall be determined in accordance with the Employment
Agreement. The terms of the Award Agreement for such Option grants shall be in
form and substance as attached to the Employment Agreement.

ARTICLE 8
STOCK APPRECIATION RIGHTS

8.1 Grant of SARs.

The Committee is authorized to grant SARs to Participants on the
following terms and conditions:

(a) Right to Payment. Upon the exercise of a SAR, the Participant to
whom it is granted has the right to receive all or a percentage of:

(1) The Fair Market Value of one share of Stock on the date of
exercise, minus,

(2) The grant price of the SAR as determined by the Committee.
In the case of a SAR offered in tandem with an Incentive Stock
Option, the grant

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<PAGE> 9

price of the SAR shall not be less than the Fair Market Value
of one share of Stock on the date of grant.

(b) Tandem Awards. SARs may be granted alone or in tandem with options.
If a SAR is granted in tandem with an option, the SAR may only be
exercised at a time when the related option is exercisable and the
difference between the Fair Market Value and the grant price is a
positive number. The exercise of the tandem SAR requires the surrender
of the related option for cancellation.

(c) Other Terms. All awards of SARs shall be evidenced by an Award
Agreement. The terms, methods of exercise, methods of settlement, form
of consideration payable in settlement, and any other terms and
conditions of any SAR shall be determined by the Committee at the time
of the grant of the Award and shall be reflected in the Award
Agreement. The grant of any SAR may include the right to Dividend
Equivalents as described in Section 7.1(e).

ARTICLE 9
PERFORMANCE AWARDS

9.1 Grant of Performance Awards.

The Committee is authorized to grant Performance Awards to Participants
on such terms and conditions as may be selected by the Committee. The Committee
shall have the complete discretion to determine the number of Performance Awards
granted to each Participant. All grants of Performance Awards shall be evidenced
by an Award Agreement.

9.2 Right to Payment.

A grant of Performance Awards gives the Participant rights, valued as
determined by the Committee, and payable to, or exercisable by, the Participant
to whom the Performance Awards are granted, in whole or in part, as the
Committee shall establish at grant or thereafter. The Committee shall set
performance goals and other terms or conditions to payment of the Performance
Awards in its discretion which, depending on the extent to which they are met,
will determine the number and value of Performance Shares that will be paid to
the Participant.

9.3 Other Terms.

Performance Awards may be payable in cash, Stock, or other property,
and have such other terms and conditions as determined by the Committee and
reflected in the Award Agreement.

ARTICLE 10
RESTRICTED STOCK AWARDS

10.1 Grant of Restricted Stock.

The Committee is authorized to make Awards of Restricted Stock to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. All Awards of Restricted Stock shall be evidenced by
a Restricted Stock Award Agreement.

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<PAGE> 10

10.2 Issuance and Restrictions.

Restricted Stock shall be subject to such restrictions as the Committee
may choose to impose. These restrictions may lapse separately or in combination
at such times, under such circumstances, in such installments, or otherwise, as
the Committee determines at the time of the grant of the Award or thereafter. An
award of Restricted Stock will provide the Participant with voting, dividend and
other ownership rights provided in the Award Agreement.

10.3 Forfeiture.

Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment during the
applicable restriction period, Restricted Stock, that is at that time subject to
restrictions, shall be forfeited and reacquired by the Company; provided,
however, that the Committee may provide in any Award Agreement that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of termination resulting from any specified cause, and the
Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.

10.4 Certificates for Restricted Stock.

Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee shall determine. If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company shall retain
physical possession of the certificate until such time as all applicable
restrictions lapse.

ARTICLE 10A
DEFERRED SHARES

10A.1 Deferred Shares.

The Committee is authorized to make Awards of Deferred Shares to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. A Deferred Share Award shall entitle the Participant
to receive Stock from the Company in the future in consideration for services
performed during the Deferral Period. All services required of the Participant
for receipt of the Deferred Share shall be evidenced by an Award Agreement.

10A.2 Deferral Period.

The "Deferral Period" means the time period mandated by the Award
Agreement during which specified services are to be performed by the Participant
that will merit receipt of the Deferred Shares.

10A.3 Other Conditions.

The Committee may authorize Dividend Equivalents, defined under Section
7.1(e), to be provided on or after the date of any grant under this Section.
During the

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Deferral Period the Participant has no right to transfer any rights covered by
the Award and no right to vote the Stock.

The grant of any Deferred Shares may require the payment of additional
consideration. However, in no case shall the additional consideration exceed the
Fair Market Value of the Shares on the date of grant.

ARTICLE 11
PROVISIONS APPLICABLE TO AWARDS

11.1 Stand-Alone, Tandem, and Substitute Awards.

Awards granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with, or in substitution
for, any other Award granted under the Plan. If an Award is granted in
substitution for another Award, the Committee may require the surrender of such
other Award in consideration of the grant of the new Award. Awards granted in
addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.

11.2 Exchange Provisions.

The Committee may at any time offer to exchange or buy out any
previously granted Award for a payment in cash, Stock, or another Award (subject
to Section 12.1), based on the terms and conditions the Committee determines and
communicates to the Participant at the time the offer is made.

11.3 Term of Award.

The term of each Award shall be for the period as determined by the
Committee, provided that in no event shall the term of any Incentive Stock
Option or a Stock Appreciation Right granted in tandem with the Incentive Stock
Option exceed a period of ten years from the date of its grant.

11.4 Form of Payment for Awards.

Subject to the terms of the Plan, the Award Agreement or any applicable
law, payments or transfers to be made by the Company on the grant or exercise of
an Award may be made in such form as the Committee determines at or after the
time of grant, including without limitation, cash, Stock, other Awards, or other
property, or any combination, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee.

11.5 Limits on Transfer.

No right or interest of a Participant in any Award may be encumbered or
pledged to or in favor of any party other than the Company , or shall be subject
to any lien, obligation, or liability of such Participant to any other party
other than the Company . No Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant

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<PAGE> 12

to a qualified domestic relations order as defined in Section 414(p)(1)(B) of
the Code, if the order satisfies Section 414(p)(1)(A) of the Code.

11.6 Beneficiaries.

Notwithstanding Section 13.5, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the Participant and to receive any distribution with respect to any Award upon
the Participant's death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights under the Plan is subject to all terms and
conditions of the Plan and any Award Agreement applicable to the Participant,
except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the
Participant is married, a designation of a person other than the Participant's
spouse as his beneficiary with respect to more than 50 percent of the
Participant's interest in the Award shall not be effective without the written
consent of the Participant's spouse. If no beneficiary has been designated or
survives the Participant, payment shall be made to the person entitled thereto
under the Participant's will or the laws of descent and distribution. Subject to
the foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the
Committee.

11.7 Stock Certificates.

All Stock certificates delivered under the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal or state securities laws, rules and regulations
and the rules of any national securities exchange or automated quotation system
on which the Stock is listed, quoted, or traded. The Committee may place legends
on any Stock certificate to reference restrictions applicable to the Stock.

11.8 Acceleration Upon Death or Disability.

Notwithstanding any other provision in the Plan or any Participant's
Award Agreement to the contrary, upon the Participant's death or Disability, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse. Any Option or Stock Appreciation
Rights Awards shall then lapse in accordance with the other provisions of the
Plan and the Award Agreement. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.

11.9 Acceleration Upon Certain Events.

In the event of (i) the commencement of a public tender offer for all
or any portion of the Stock, (ii) a proposal to merge, consolidate or otherwise
combine with another company is submitted to the stockholders of the Company for
approval, or (iii) the Board approves any transaction or event that would
constitute a change of control of the Company of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised to become fully exercisable, and/or all restrictions on all
outstanding Awards to lapse, in each case as of such date as the Committee may,
in its sole discretion, declare, which may be on or before the consummation of
such tender offer or other transaction or event. To the extent that this
provision causes Incentive

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Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.

ARTICLE 12
CHANGES IN CAPITAL STRUCTURE

12.1 General.

In the event a stock dividend is declared upon the Stock, the shares of
Stock then subject to each Award shall be increased proportionately without any
change in the aggregate purchase price therefor. In the event the Stock shall be
changed into or exchanged for a different number or class of shares of stock or
securities of the Company or of another company, whether through reorganization,
recapitalization, stock split, reverse stock split, combination of shares,
merger or consolidation, there shall be substituted for each such share of Stock
then subject to each Award the number and class of shares into which each
outstanding share of Stock shall be so exchanged. The Committee shall make such
adjustments to the aggregate purchase price for the shares then subject to each
Award as it deems necessary or advisable to put Participants in the same
relative position after such change in capital structure as before such change.

ARTICLE 13
AMENDMENT, MODIFICATION AND TERMINATION

13.1 Amendment, Modification and Termination.

With the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Plan; provided, however, that no
amendment of the Plan may be made without approval of the stockholders of the
Company as may be required by the Code, by the insider trading rules of Section
16 of the 1934 Act, by any national securities exchange or automated quotation
system on which the Stock is listed or reported.

13.2 Awards Previously Granted.

No termination, amendment, or modification of the Plan shall adversely
affect any Award previously granted under the Plan, without the written consent
of the Participant.

ARTICLE 14
GENERAL PROVISIONS

14.1 No Rights to Awards.

No Participant or employee shall have any claim to be granted any Award
under the Plan, and neither the Company nor the Committee is obligated to treat
Participants and employees uniformly.

14.2 No Stockholder Rights.

No Award gives the Participant any of the rights of a stockholder of
the Company unless and until shares of Stock are in fact issued to such person
in connection with such Award.

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<PAGE> 14

14.3 Withholding.

The Company shall have the authority and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any taxable event
arising as a result of the Plan. With respect to withholding required upon any
taxable event under the Plan, the Committee may, at the time the Award is
granted or thereafter, require that any such withholding requirement be
satisfied, in whole or in part, by withholding shares of Stock having a Fair
Market Value on the date of withholding equal to the amount to be withheld for
tax purposes, all in accordance with such procedures as the Committee
establishes.

14.4 No Right to Employment.

Nothing in the Plan or any Award Agreement shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, nor confer upon any Participant any right to continue in
the employ of the Company.

l4.5 Unfunded Status of Awards.

The Plan is intended to be an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company .

14.6 Indemnification.

To the extent allowable under applicable law, each member of the
Committee shall be indemnified and held harmless by the Company from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
such member in connection with or resulting from any claim, action, suit, or
proceeding to which such member may be a party or in which he may be involved by
reason of any action or failure to act under the Plan and against and from any
and all amounts paid by such member in satisfaction of judgment in such action,
suit, or proceeding against him provided he gives the Company an opportunity, at
its own expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the By-Laws of the Company or as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

14.7 Relationship to Other Benefits.

No payment under the Plan shall be taken into account in determining
any benefits under any pension, retirement, savings, profit sharing, group
insurance, welfare or benefit plan of the Company.

14.8 Expenses.

The expenses of administering the Plan shall be borne by the Company.

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<PAGE> 15

14.9 Titles and Headings.

The titles and headings of the Sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.

14.10 Gender and Number.

Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the
singular and the singular shall include the plural.

14.11 Fractional Shares.

No fractional shares of Stock shall be issued and the Committee shall
determine, in its discretion, whether cash shall be given in lieu of fractional
shares or whether such fractional shares shall be eliminated by rounding up.

14.12 Securities Law Compliance.

With respect to any person who is, on the relevant date, obligated to
file reports under Section 16 of the 1934 Act, transactions under the Plan are
intended to comply with Rule 16b-3(d) as transactions between the Company and
its officers or directors. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be void to the extent permitted by
law and voidable as deemed advisable by the Committee.

14.13 Government and Other Regulations.

The obligation of the Company to make payment of awards in Stock or
otherwise shall be subject to all applicable laws, rules, and regulations, and
to such approvals by government agencies as may be required. The Company shall
be under no obligation to register under the 1933 Act, any of the shares of
Stock paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.

14.14 Governing Law.

To the extent not governed by federal law, the Plan and all Award
Agreements shall be construed in accordance with and governed by the laws of the
District of Columbia.

<PAGE> 1
CONFIDENTIAL TREATMENT REQUESTED
FOR PORTIONS OF THIS DOCUMENT

EXHIBIT 10.10

COOPERATION AND STRATEGIC
ALLIANCE AGREEMENT

This Cooperation and Strategic Alliance Agreement (this "Agreement) is
entered into as of September 3, 1997, by and between LRX Pharmaceuticals, Inc.,
a Delaware corporation ("LRX"), and MiniMed Inc., a Delaware corporation
("MiniMed").

RECITALS

A. LRX has rights to, and is further developing, a pharmaceutical compound
for the treatment of certain pulmonary hypertension and other vascular
conditions.

B. MiniMed is a leader in the design, development, manufacturing and
marketing of advanced microinfusion systems for delivery of a variety of drugs.

C. MiniMed and LRX wish to cooperate in the development, establishment and
worldwide delivery of therapies for the treatment of targeted medical conditions
by taking advantage of the respective technologies and other resources and
assets of MiniMed and LRX, on the terms and subject to the conditions of this
Agreement.

AGREEMENT

In consideration of the terms and conditions contained herein, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows.

1. DEFINITIONS.

(a) "Affiliate" means any person, directly or indirectly, controlling,
controlled by or under common control with any other person. "Control" shall
mean the direct or indirect ownership of 50% or more of the voting interest in,
or 50% or more of the interest in the income

<PAGE> 2

of, such other person, or the ability to appoint, elect or direct at least 50%
of the governing body of any such person.

(b) "Alliance Coordinator" means the person designated by a Party pursuant
to Section 3(e) of this Agreement, to be the primary contact person for such
Party for purposes of this Agreement.

(c) "FDA" means the United States Food and Drug Administration, and any
successor entity that may be established hereafter which has substantially the
same authority or responsibility currently vested in the United States Food and
Drug Administration.

(d) "15-AU" means that certain prostacyclin analog licensed exclusively to
LRX and being developed by LRX for treatment of targeted medical conditions,
particularly, primary pulmonary hypertension ("PPH"), secondary pulmonary
hypertension ("SPH"), and peripheral vascular disease ("PVD").

(e) "Governing Rules" means the general guidelines established by the
Managing Committee pursuant to Section 3(d) of this Agreement, which will be
used to guide generally the activities of the Managing Committee and the Parties
which are undertaken pursuant to this Agreement.

(f) "Joint Intellectual Property" means any intellectual property rights
which arise from the joint activities conducted pursuant to this Agreement, and
which shall be jointly owned as set forth in Section 7 of this Agreement.

(g) "Law" means any local, state or federal rule, regulation, statute or
law relevant to the activities undertaken pursuant to this Agreement or
applicable to either of the Parties with respect to any matters set forth
herein.

(h) "Losses" means any liabilities, damages, costs or expenses, including
without limitation, reasonable attorneys' fees (including the allocable cost of
in-house counsel), which arise from any claim, lawsuit, demand or other action
by any Party other than one of the Parties or an Affiliate of one of the
Parties.

<PAGE> 3

(i) "Managing Committee" means the committee established pursuant to
Section 3 which is responsible for the development and oversight of all
activities pursuant to this Agreement, in accordance with the terms of this
Agreement.

(j) "MiniMed Products" means any products, supplies or other goods which
are designed, developed, manufactured or marketed by MiniMed, whether existing
on the date of this Agreement or subsequently developed, acquired or otherwise
obtained by MiniMed.

(k) "Party" or "Parties" means MiniMed or LRX, or MiniMed and LRX,
collectively, as appropriate.

(1) "Senior Management Representative" means an executive officer of each
Party designated to facilitate the resolution of disputes hereunder, as
described in Section 3 of this Agreement.

(m) "Target Therapy" means a comprehensive health care therapy which
utilizes 15-AU and MiniMed Products and which is to be delivered through the
cooperative efforts of the Parties as contemplated by this Agreement.

2. GENERAL AGREEMENT.

MiniMed and LRX shall collaborate and cooperate in the design, development
and implementation of therapies for the treatment of PPH, SPH and PVD, utilizing
MiniMed Products and 15-AU, as set forth herein. The specific terms regarding
the scope and type of the collaborative efforts (including, without limitation,
the economic terms with respect to the parties), shall be determined from time
to time in accordance with Sections 3 and 4 of this Agreement. In addition to
PPH, SPH, and PVD, LRX and MiniMed may, in their discretion and subject to
mutual agreement, identify other medical conditions to be targeted by the
Parties hereunder.

<PAGE> 4

3. MANAGING COMMITTEE.

(a) MiniMed and LRX shall establish a Managing Committee hereunder, which
shall consist of two (2) representatives from each of MiniMed and LRX. The
initial designees are set forth in Schedule A hereto. MiniMed and LRX may each
from time to time replace its respective representatives on the Managing
Committee, in its sole and absolute discretion, by notice to the other Party.

(b) It is among the objectives of the Parties to design, develop and
implement the Target Therapy in a reasonably practicable fashion, subject,
however, to the respective corporate regulatory, financial and other obligations
and considerations of each of the Parties from time to time determined. To
achieve this objective, the Managing Committee shall be responsible for
establishing an implementation strategy to carry out the intent of this
Agreement, and ultimately to commercialize the Target Therapy.

(c) The Managing Committee shall meet at such times and places as it shall
determine appropriate to carry out its responsibilities hereunder. Such meetings
may be in person or by means of telephonic communication. Either Party may
designate an alternate member of the Managing Committee to act on behalf of a
member on a temporary or interim basis, in the reasonable discretion of such
Party. Either Party, through its Managing Committee members, may call a meeting
of the Managing Committee by giving written notice thereof to the members of the
other Party.

(d) The Managing Committee shall establish guidelines to govern the
strategic activities, co-development and related activities of the Parties; the
Managing Committee shall also establish such guidelines with respect to
operational matters at such time as the Target Therapy is commercialized or in a
pre-commercial phase, as contemplated by this Agreement. All such guidelines
shall be subject to the qualification of Section 3(g) hereof. The Managing
Committee shall be responsible for taking such other actions as may be provided
for or contemplated by this Agreement, subject at all times to the requirements
of Section 3(g), including the establishment and implementation of the
"Governing Rules."

<PAGE> 5

(e) The Parties shall each name one (1) of its Managing Committee members
as its Alliance Coordinator, who shall be the primary contact for purposes of
this Agreement, except to the extent the parties may otherwise agree. Either
Party may change its designation of Alliance Coordinator, in its sole and
absolute discretion, upon written notice to the other Party.

(f) If a disagreement arises between the Parties as to any matters within
the scope of this Agreement, either Party may give written notice to the other.
If the Alliance Coordinators are unable to resolve the dispute satisfactorily,
despite their good faith efforts, within (30) days of receipt of such notice,
either Alliance Coordinator may request a meeting of the Managing Committee,
which will, in good faith, diligently seek to resolve the dispute. If the
Managing Committee is unable to resolve the dispute, notwithstanding the
exercise of good faith efforts, within (30) days after such meeting, then,
unless otherwise agreed by the Alliance Coordinators, the matter shall
thereafter formally be referred to a Senior Management Representative of each of
the Parties, the initial designations of which are set forth in Schedule A.
Either Party may, in its sole discretion, change its designee of the Senior
Management Representative by written notice to the other. Except as expressly
provided in the immediately following sentence, neither Party shall initiate any
formal action against the other including, without limitation, the formal
commencement of arbitration proceedings or the formal filing of legal action,
until at least thirty (30) days have elapsed since the first communication
between the Senior Management Representatives hereunder. Notwithstanding the
foregoing, either Party may initiate proceedings to seek injunctive relief
before the time period otherwise required hereunder shall elapse, if such Party
in good faith believes that it will suffer irreparable harm without the
initiation of such proceedings.

(g) Notwithstanding anything to the contrary contained in this Agreement,
the authority of the Managing Committee shall at all times be subject to the
respective requirements and obligations of the quality systems and regulatory
policies and procedures, and internal corporate governance requirements, of each
of LRX and MiniMed. The Managing Committee shall establish Governing Rules,
which shall serve as guidelines for the general activities under this Agreement,
which Governing Rules shall supplement the terms hereof, but which procedures
and systems shall satisfy and be consistent with the respective policies,
procedures, and systems

<PAGE> 6

of MiniMed and LRX. In that regard, the Parties shall reasonably cooperate in an
attempt to assure their respective systems do not unduly impede the carrying out
of the intent of this Agreement. Without limiting the generality of the
foregoing, the operations and authority of the Managing Committee shall be
consistent with the underlying corporate policies of each of MiniMed and LRX
with respect to the operation of clinical trials and studies, regulatory studies
relating to development, promotion, worldwide distribution and servicing of the
delivery of the Target Therapy, quality assurance activities, medical device and
adverse event reporting requirements, patent strategies, and the like. The
Managing Committee shall establish a proposed approach for the Governing Rules
within ninety (90) days of the execution of this Agreement that shall consider
the relevant respective obligations of the parties.

4. JOINT ACTIVITIES

The Parties shall diligently pursue the design, development and ultimate
commercialization of the Target Therapy as from time to time determined by
Managing Committee, and the Managing Committee shall develop a comprehensive
plan with respect to such activities. It is the intention of the Parties that
they will cooperate jointly in such activities, as from time to time mutually
determined by the Managing Committee and agreed to by the Parties. The Parties
currently contemplate that the joint pursuit of the Target Therapy may be
developed in one or more phases. The Parties further contemplate preliminarily
that the respective responsibilities of the Parties will be as described in
Schedule B hereto, it being understood by the Parties, however, that such
schedule reflects only the initial understanding of the Parties, and the
Managing Committee shall be responsible for finalizing such strategy in a
definitive manner.

It is the intention of the Parties that they will participate in the
investment, contribution, commitment and risks associated with the design,
development and commercialization of the Target Therapy. Accordingly, the
parties intend generally to allocate the financial costs and profits of the
Target Therapy commercialized hereunder. It is currently contemplated, however,
that: (i) MiniMed shall be responsible generally for all development and
regulatory expenses relating to the MiniMed Products, and (ii) LRX shall be
responsible for all development and

<PAGE> 7

regulatory expenses relating to 15-AU. The Parties may from time to time agree
to allocate such costs and expenses differently in certain circumstances.

In furtherance of the foregoing, the Parties intend to establish an
appropriate strategy to carry out the intent of the cooperative relationship
contemplated hereby, and intend to consider appropriate provisions for revenue
sharing, which may include, without limitation, the following: (i) determination
of an appropriate transfer price for 15-AU (in circumstances in which the
Managing Committee determines that MiniMed is the appropriate party to undertake
distribution, and on such terms as the Parties may agree), (ii) allocation for
costs and expenses associated with formulation and packaging of 15-AU and, to
the extent required, the MiniMed Products, (iii) costs associated with the
delivery of the Target Therapy, (iv) costs associated with clinical and
technical support associated with the Target Therapy and (v) an appropriate
formula or basis to determine the profits derived from the delivery of the
Target Therapy.

Notwithstanding the foregoing, however, the parties recognize and agree
that an unanticipated disparity may occur or eventuate in the actual
contribution of each Party with respect to the design, development, distribution
and commercialization of the Target Therapy. With respect thereto, to the extent
a Party in good faith concludes that the financial return to such Party is
inconsistent with this Agreement and the reasonable expectations of such Party,
then it may give notice thereof to the other Party (which shall include
supporting documentation for its position), to be reviewed and considered by the
other Party. The Parties shall engage in good faith negotiations relative to the
financial arrangement then applicable as between the Parties with respect to the
Target Therapy to the extent a notice is given as contemplated by this
provision.

5. REPRESENTATIONS AND WARRANTIES.

(a) MiniMed Representations and Warranties. MiniMed represents and warrants
to LRX as follows:

(i) MiniMed is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, is duly
qualified to do

<PAGE> 8

business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its business or the ownership of its
property makes such qualification necessary, except where the failure to so
qualify or be in good standing would not have a material adverse effect on
MiniMed or its ability to perform hereunder.

(ii) MiniMed has the full power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated herein. The
execution, delivery and performance of this Agreement have been duly and
validly authorized and approved by all necessary corporate action on the
part of MiniMed. This Agreement has been duly executed and the provisions
hereof constitute the valid and legally binding obligations of MiniMed and
do not require the consent, approval or authorization of, or registration,
qualification, designation, declaration or filing with, any person, public
or governmental authority or other entity, except for any of the foregoing
which have been received or obtained or, either individually or in the
aggregate, do not and would not have a material adverse effect upon MiniMed
or its ability to perform its obligations hereunder.

(iii) The execution and delivery of this Agreement by MiniMed, and the
performance of its obligations hereunder, are not in violation or breach
of, and will not conflict with or constitute a default under, the
Certificate of Incorporation or Bylaws of MiniMed, or any material
agreement, contract, commitment or obligation to which MiniMed is a Party
or by which it is bound, and will not conflict with or violate any
applicable Law or any order or decree of any governmental agency or court
having jurisdiction over MiniMed or its assets or properties.

(iv) MiniMed has and, at the time the Targeted Therapy is
commercialized will have, all right, title and interest in and to the
MiniMed Products used in connection with the Targeted Therapy.

(b) LRX- Representations and Warranties. LRX represents and warrants to
MiniMed as follows:

<PAGE> 9

(i) LRX is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of its business or the ownership
of its property makes such qualification necessary, except where the
failure to so qualify or be in good standing would not have a material
adverse effect on LRX or its ability to perform hereunder.

(ii) LRX has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein. The
execution, delivery and performance of this Agreement have been duly and
validly authorized and approved by all necessary corporate action on the
part of LRX. This Agreement has been duly executed and the provisions
hereof constitute the valid and legally binding obligations of LRX and do
not require consent, approval or authorization of, or registration,
qualification, designation, declaration or filing with, any person, public
or governmental authority or other entity, except for any of the foregoing
which have been received or obtained or, either individually or in the
aggregate, do not and would not have a material adverse effect upon LRX or
its ability to perform its obligations hereunder.

(iii) The execution and delivery of this Agreement by LRX, and the
performance of its obligations hereunder, are not in violation or breach
of, and will not conflict with or constitute a default under, the Articles
or Certificate of Incorporation or Bylaws of LRX, or any material
agreement, contract, commitment or obligation to which LRX is a Party or by
which it is bound, and will not conflict with or violate any applicable Law
or any order or decree of any governmental agency or court having
jurisdiction over LRX or its assets or properties.

(iv) LRX has and, at the time the Targeted Therapy is commercialized
will have, the sole and exclusive right to exploit 15-AU for the Targeted
Therapy, which right is not subject to any restrictions or encumbrances
whatsoever.

9
<PAGE> 10

6. COMPLIANCE WITH LAWS.

In performing their obligations hereunder, MiniMed and LRX shall comply in
all material respects with all Laws regarding or relevant to the performance of
their respective obligations hereunder, except for any noncompliance which,
individually or in the aggregate, do not and would not have a material adverse
affect upon either Party hereto, or the agreements contemplated hereby. Without
limiting the generality of the foregoing, each Party shall comply in all
respects with all of the rules, regulations, statutes and laws under the
jurisdiction of the FDA, comparable regulatory bodies of any state or any
foreign jurisdiction, or such other regulatory authority which may from time to
time exercise jurisdiction over the activities of either MiniMed or LRX, or
which affect, impact or otherwise relate to this Agreement or the activities
conducted hereunder or contemplated hereby. MiniMed and LRX shall cooperate with
each other during any inspection, investigation or other inquiry by any
governmental agency exercising any such jurisdiction or authority, including
providing appropriate information and/or documentation, as may be lawfully
requested by such governmental entity. Notwithstanding the foregoing, each Party
expressly reserves its rights to in good faith challenge the activities of any
such governmental agency, to the extent such Party deems appropriate. Further
notwithstanding the foregoing, neither MiniMed nor LRX shall be under any
obligation to disclose information hereunder if, and to the extent, such Party
in good faith is seeking to protect the attorney-client privilege with respect
to any such activity or event.

7. INTELLECTUAL PROPERTY.

(a) Joint Developments. Each Party shall disclose to the other any and all
useful ideas, concepts, methods, procedures, processes, improvements, invention,
discoveries, and the like which arise from the joint activities conducted by the
Parties hereunder ("Discoveries") of any nature, made, conceived or first
reduced to practice as result of the Parties' activities hereunder relating to
the delivery of the Target Therapy. The Parties shall jointly own any and all
rights, title and interest in and to all Discoveries that are a result of this
Agreement, and such property shall constitute Joint Intellectual Property
hereunder. The parties contracting for any work performed under this Agreement
by a subcontractor or contract employee shall ensure all

<PAGE> 11

Discoveries vest with LRX and MiniMed. The Parties shall in good faith consider
the inclusion of procedures relative to patent filings and related matters with
respect to Discoveries which constitute Joint Intellectual Property, which
procedures would be considered for inclusion in the Governing Rules.

(b) Sole Property. All existing LRX intellectual property (including all
aspects of 15-AU), and all intellectual property developed solely by or on
behalf of LRX independent from activities pursuant to this Agreement (which must
be independently verifiable), shall be and remain the sole and exclusive
property of LRX. All existing MiniMed intellectual property (including all
aspects of the MiniMed Products), and all intellectual property developed solely
by or on behalf of MiniMed independent from activities undertaken pursuant to
this Agreement (which must be independently verifiable), shall be and remain the
sole and exclusive property of MiniMed.

8. COVENANT NOT TO COMPETE; EXCLUSIVITY.

(a) Except as provided for herein, during the term of this Agreement, the
Parties shall deal exclusively with one another with respect to the delivery of
the Target Therapy, subject to the inclusion of additional collaborative parties
as the Parties may from time to time agree.

(b) Except as provided in subsection (d) below, during the term of this
Agreement and for a period of one (1) year thereafter, LRX shall not, without
the prior written consent of MiniMed, enter into any agreement or arrangement
with any person or entity with respect to the design, development or
distribution of 15-AU for administration in a comprehensive subcutaneous,
intravenous or transdermal medication delivery system.

(c) Except as provided in subsection (d) below, during the term of this
Agreement and for a period of one (1) year thereafter, MiniMed shall not,
without the prior written consent of LRX, enter into any agreement or
arrangement with any person or entity with respect to the infusion of a
medicinal compound for the treatment of PPH or SPH.

(d) Notwithstanding the foregoing, the Parties acknowledge that unforeseen
circumstances may eventuate wherein a Party is materially and adversely affected
because of the

<PAGE> 12

exclusivity and noncompetition provisions contained herein. In the event such
were to occur, the Parties so affected may terminate its obligations hereunder
with respect to therapy delivery relative to PPH and/or SPH, in which case the
terminating party shall be obligated to pay the other party royalties of [ ] of
the net proceeds. For purposes herein, "Net Proceeds" shall mean the gross
revenue derived from sales of 15-AU for the treatment of PPH or SPH (in the
event LRX is the terminating party) or sales of the MiniMed Products (relative
to delivery of therapy to treat PPH or SPH), less (i) applicable taxes and other
governmental charges, (ii) allowances for credits, returns, discounts, rebates,
cancellations, and (iii) actual freight costs. The obligation to pay such
royalties shall terminate on the sixth (6th) anniversary of the date the FDA
grants a new drug approval. The non-terminating party shall have reasonable
audit rights to verify such royalty payments, which shall be paid quarterly
(within 60 days of the end of each calendar quarter), and all be accompanied by
a royalty report setting forth the basis for the royalty calculation.

9. TERM, EXTENSION AND TERMINATION.

(a) Term. The term of this Agreement shall commence as of the date hereof
and continue until the date seven (7) years after the FDA grants a New Drug
Approval for 15-AU to be used in the Target Therapy hereunder ("Initial Term"),
unless sooner terminated as set forth herein. Unless sooner terminated in
accordance with the terms of this Agreement, the term of this Agreement shall
automatically be extended for additional successive 12-month periods, unless a
Party gives notice of nonrenewal at least six (6) months prior to the end of the
Initial Term or any renewal term.

(b) Termination.

(i) Breach. If a Party materially defaults in its performance of any
of its material obligations under this Agreement, and such default is not
cured or resolution of a disputed breach pursuant to Subsection 3(f) is not
demanded within sixty (60) days of written notice of such default by the
other Party, this Agreement may be terminated at the end of such 60-day
period by the Party not in default by written notice of termination to

<PAGE> 13

the defaulting Party, such written notice to be given not later than
seventy-five (75) days after the first written notice.

(ii) Bankruptcy. In the event of the institution by or against either
Party of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of a Party's debts which are not dismissed
within sixty (60) days, or upon a Party's making an assignment for the
benefit of creditors, or upon a Party's dissolution or ceasing to do
business, the other Party may terminate this Agreement upon written notice.

(c) Effect of Termination. The provisions of Section 8 (Covenant Not to
Compete), Section 10 (Confidentiality), Section 11 (Indemnification), and
Section 12 (General), shall survive the termination of this Agreement.

10. CONFIDENTIALITY

(a) Disclosure of Confidential Information. Except as otherwise expressly
provided in this Agreement or as may be agreed to by the Managing Committee in
writing, both MiniMed and LRX shall retain in confidence and not use for its own
benefit (other than as expressly contemplated by this Agreement) all
confidential and proprietary information received from the other as a result of
this Agreement during the term of this Agreement and continuing thereafter for a
period of five (5) years after termination. Such information may, however, be
disclosed insofar as such disclosure is necessary (where possible, with adequate
safeguards for confidentiality) to allow either Party to defend against
litigation, to file and prosecute patent applications or to comply with
governmental regulations, or rules or regulations of applicable self-regulatory
organizations (including, without limitation, any exchange or stock market on
which the securities of a Party are listed or traded, or qualified for trading),
or otherwise as required by Law. Such obligation of confidentiality and non-use
shall also not apply to information which: (i) is in the public domain as of the
date of receipt, (ii) comes into the public domain through no fault of the Party
claiming waiver, (iii) was known by the Party claiming waiver prior to
disclosure, as shown by such Party's written records, (iv) is disclosed to the
Party claiming waiver by a third party having a lawful right to make such
disclosure, (v) is independently developed by the Party claiming waiver, or (vi)
disclosed to a third party that has

13
<PAGE> 14

agreed in writing to be bound by obligations of confidentiality similar to those
set forth herein. Nothing contained herein shall prevent either Party from
disclosing information to its Affiliates or to the FDA or other regulatory
authorities where necessary.

(b) Press Release and Public Announcements. MiniMed and LRX shall not issue
any press release or public announcement with respect to this Agreement without
the prior consent of the other Party as to the form and content of such release,
except for any such release or announcement that may be required by Law or the
rules or regulations of any exchange on which the securities of a Party are
listed, traded or qualified for trading. To the extent practical, the parties
shall consult with each other in advance as to the form, content and timing of
all releases or announcements. It is the present intention of the parties to
issue a joint press release announcing the execution of this Agreement.

(c) Existing Mutual Nondisclosure Agreement. The Mutual Nondisclosure
Agreement entered into by the Parties and effective as of March 18, 1997 is
superseded by Section 10 of this Agreement; provided, however, that any
confidential information disclosed by one Party to the other pursuant to such
Mutual Nondisclosure Agreement shall be treated as if it had been disclosed
after the Effective Date of this Agreement shall therefore be subject to the
terms of this Section.

11. INDEMNIFICATION.

(a) Indemnification by MiniMed. MiniMed shall indemnify, defend and hold
LRX harmless from and against any and all Losses resulting from or arising out
of the negligence or willful misconduct of MiniMed in the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, MiniMed shall indemnify, defend and hold LRX harmless from and
against Losses relating to product liability claims solely with respect to
MiniMed Products which are designed, developed and manufactured solely and
independently by MiniMed.

(b) Indemnification by LRX. LRX shall indemnify, defend and hold MiniMed
harmless from and against any Losses resulting from or arising out of negligence
or willful

<PAGE> 15

misconduct of LRX in performing its obligations under Agreement. Without
limiting the generality of the foregoing, LRX shall indemnify, defend and hold
MiniMed harmless from and against any Losses resulting solely from any design
defect or other claim with respect to AU-15.

(c) Indemnification Procedures. A Party seeking indemnification (the
"Indemnified Party") pursuant to this Section 11 shall notify, in writing, the
other Party (the "Indemnifying Party") within fifteen (15) days of the assertion
of any claim or discovery of any fact upon which the Indemnified Party intends
to base a claim for indemnification. An Indemnified Party's failure to so notify
the Indemnifying Party shall not, however, relieve the Indemnifying Party from
any liability under this Agreement to the Indemnified Party with respect to such
claim except to the extent that such Indemnifying Party is actually denied,
during the period of delay in notice, or materially prejudiced with respect to,
the opportunity to remedy or otherwise mitigate the event or activity(ies)
giving rise to the claim for indemnification and thereby suffers or otherwise
incurs additional quantifiable damages as a result of such failure. The
Indemnifying Party, while reserving the right to contest its obligations to
indemnify hereunder, shall be responsible for the defense of any claim, demand,
lawsuit or other proceeding in connection with which the Indemnified Party
claims indemnification hereunder. The Indemnified Party shall have the right at
its own expense to participate jointly with the Indemnifying Party in the
defense of any such claim, demand, lawsuit or other proceeding, but with respect
to any issue involved in such claim, demand, lawsuit or other proceeding with
respect to which the Indemnifying Party has acknowledged its obligation to
indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the
right to select counsel, settle, or otherwise dispose of or handle such claim,
demand, lawsuit or other proceeding on such terms as the Identifying Party shall
deem appropriate, subject to any reasonable objection of the Indemnified Party.

(d) Insurance. The Parties, through the Managing Committee, shall pursue
purchase of appropriate liability insurance which would jointly insure both of
the Parties for the activities undertaken pursuant to this Agreement, to the
extent such insurance is available to the Parties on commercially reasonable
terms. The Managing Committee shall in good faith determine the most efficient
and effective way to obtain such insurance and shall in good faith negotiate an
appropriate allocation of the cost of acquiring any such insurance.

15
<PAGE> 16

12. GENERAL.

(a) Entire Agreement. This Agreement, including any Schedules, Exhibits and
Appendices, constitutes the entire agreement and understanding relating to the
subject matter of this Agreement and supersedes all previous communications,
proposals, representations and agreements, whether oral or written, including
that certain Letter Agreement between the parties dated May 20, 1997 relating to
the subject matter of this Agreement.

(b) Counterparts and Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. Headings of sections and subsections
of this Agreement are for convenience only and the construction of this
Agreement shall not be affected by reference to such headings.

(c) Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been sufficiently
given for all purposes if personally delivered or mailed by first class
certified or registered mail, postage prepaid, hand delivered, or sent by
telecopy or by reputable courier. Notices sent by U.S. mail shall be deemed
delivered three (3) days after deposit with postal authorities or upon confirmed
delivery if personally delivered, sent by confirmed fax or courier service.
Unless otherwise specified in writing, the mailing addresses of the parties
shall be as described below:

For LRX: LRX Pharmaceuticals, Inc.

2 Davis Drive

Research Triangle Park, North Carolina 27709

Attention: President

Fax Number: (202) 518-8200

<PAGE> 17

For MiniMed: MiniMed Inc.

12744 San Fernando Road

Sylmar, California 91342

Attention: President

Fax Number: (818) 362-6928

Copy to: General Counsel at same address

Fax Number (818) 367-1460

(d) Amendment and Waiver. This Agreement may be modified, amended and
supplemented only by written agreement signed by the Parties. The waiver by any
Party to this Agreement of any breach or violation of any provision of this
Agreement by the other Party shall not operate or be construed to be a waiver of
any subsequent breach or violation of the same or any other provision of this
Agreement.

(e) Assignment. Neither Party may assign its rights and obligations under
this Agreement without the prior written consent of the other Party. This
Agreement shall be binding upon, and inure to the benefit of, the legal
successors to the Parties hereto.

(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

(g) Partial Invalidity. If any provision of this Agreement is held to be
invalid, then the remaining provisions shall nevertheless remain in full force
and effect. The Parties agree to renegotiate in good faith any term held invalid
and be bound by the mutually agreed substitute provision.

(h) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the

<PAGE> 18

provisions of this Agreement. When this Agreement uses the word "including" such
word shall be deemed to be followed by the words "without limitation."

(i) Force Majeure. Both Parties to this Agreement shall be excused from the
performance of their obligations hereunder if such performance is prevented by
force majeure and the nonperforming Party promptly provides notice of the
prevention to the other Party. Such excuse shall be continued so long as the
condition constituting force majeure continues and the nonperforming Party takes
reasonable efforts to remove the condition. For purposes of this Agreement,
"force majeure" shall include conditions beyond the control of the Parties and
not resulting from the negligence of the Party seeking excuse, including an act
of God, war, civil commotion, epidemic, failure or default of public utilities
or common carriers, destruction of production facilities or materials by fire,
earthquake, storm or like catastrophe.

(j) Independent Contractors. The relationship of LRX and MiniMed
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to give either Party the power to
direct and control the day-to-day activities of the other or allow one Party to
create or assume any obligation on behalf of the other of any purpose
whatsoever.

(k) Limitation of Liability. Except as may be elsewhere herein specifically
provided for, neither Party shall be liable to the other for indirect, special,
incidental, consequential or punitive damages, or for any lost profits of the
other Party, however caused and on any theory of liability, arising out of the
performance or failure to perform any obligations set forth herein.

IN WITNESS WHEREOF, this Agreement is executed and effective as of the date
first above written.

LRX PHARMACEUTICALS, INC. MINIMED INC.

/s/ GILLES CLOUTIER /s/ ERIC S. KENTOR
- -------------------------- -------------------
Gilles Cloutier, Ph.D. Eric S. Kentor
Executive Vice President Senior Vice President

18
<PAGE> 19

SCHEDULE B

The following sets forth the allocation of responsibilities between the Parties
with respect to the development and ultimate commercialization of the delivery
of the Target Therapy. While the following sets forth the current intention of
the Parties, the Parties further recognize and agree that the actual development
of the Target Therapy, and, assuming such developmental efforts are successful,
the ultimate commercialization thereof, remains subject to a number of
contingencies and considerations, some of which are not at this time
predictable. Accordingly, the following only expresses the present intention of
the Parties, and it is anticipated to be subject to further refinement,
clarification, modification and other considerations prior to definitive
implementation. In this regard, the Management Committee should recognize that,
with regard to this 15-AU pulmonary hypertension project, the expertise of LRX
is in the fields of CMC and clinical development of pharmaceuticals while the
expertise of MiniMed is in the field of drug delivery.

Subject to the foregoing, the Parties currently contemplate that the Target
Therapy may be developed in one or more phases, which may include or address,
without limitation, the following:

(a) Cooperative efforts between the Parties relating to the formulation of
15-AU for delivery via the MiniMed Products, including, without limitation,
chemical stability, concentration, preservative, and materials compatibility
issues.

(b) Clinical research, including the design, development, implementation
and analysis of clinical trials and protocols, feasibility studies and similar
studies from time to time agreed to by the Parties. It is currently contemplated
that MiniMed will be responsible for distribution of the Target Therapy system
in clinical trials conducted in North America and Europe. The parties will
evaluate the appropriate mechanism for the compounding and distribution vehicle
for 15-AU in connection with such clinical activities. The Parties will evaluate
personnel and other resources necessary to conduct clinical trials, including
consideration of utilizing MiniMed

19
<PAGE> 20

SCHEDULE B (CONTINUED)

personnel in Europe and/or the United States or, alternatively, contracting with
an independent clinical research organization to conduct the trials; the
ultimate structure of such trials, and financial responsibility, shall be
determined by the Managing Committee.

(c) Strategies and physical requirements for the manufacture, packaging,
storage, and shipment of 15-AU relative to the Target Therapy, and related
activities constituting pharmacy services.

(d) Market research activities.

(e) Patent strategies with respect to any Joint Intellectual Property.

(f) Strategies and activities relative to the requisite regulatory
approvals and post-market regulatory compliance for the components of the Target
Therapy. Currently, the Parties generally anticipate that LRX will be
responsible for the regulatory approval of 15-AU and MiniMed will generally be
responsible for the regulatory approval of the MiniMed Products relative to the
Target Therapy. Notwithstanding the foregoing, however, the Managing Committee
may from time to time determine joint regulatory strategies which may include
joint or coordinated meetings and/or submissions to the FDA and other
appropriate regulatory authorities.

(g) Market development activities, which may include, without limitation,
educational and other programs for health care professionals and third
parties-payors, and related marketing activities which may include, without
limitation, activities directed to patients, health care professionals and third
party payors. It is currently anticipated that MiniMed will assume primary
responsibility for this function.

(h) Clinical and technical services to provide support relative to the
delivery systems for the Target Therapy, which may be based upon the current
MiniMed model of providing 24-hour clinical services and technical services for
the MiniMed products. The Parties currently

20
<PAGE> 21

SCHEDULE B (CONTINUED)

anticipate that a system will be developed whereby adverse drug events relative
to 15-AU will generally be the responsibility of LRX, and the need for a system
whereby such adverse events which come to the attention of MiniMed shall be
reported to LRX; similarly, to the extent LRX becomes aware of any adverse
events involving the MiniMed Products, a companion communication system may be
developed.

(i) Sales and related worldwide distribution activities relating to the
Target Therapy. Currently, the Parties envision that it is in their mutual best
interest to package and commercialize the Target Therapy as a comprehensive
product. Accordingly, it is anticipated that MiniMed shall generally assume
primary responsibility for the sales, marketing and related activities with
respect to the distribution and commercial activities of the Target Therapy,
which is anticipated to include component elements of each of the Party's
products.

(j) Warranty, product service and similar matters relative to the component
elements of the Target Therapy.

<PAGE> 22

September 3, 1997

LRX Pharmaceuticals, Inc.
1826 R Street, N.W,
Washington D.C. 20009

Re: Letter Agreement

Ladies and Gentlemen:

Reference is made to that certain Cooperation and Strategic Alliance Agreement
(the "Agreement") of even date between LRX Pharmaceuticals, Inc., a Delaware
corporation ("LRX") and MiniMed Inc., a Delaware corporation ("MiniMed").
Capitalized terms used but not otherwise described herein have the meanings set
forth in the Agreement. The purpose of this Letter Agreement is to memorialize
certain agreements and understandings between LRX and MiniMed which relate to
the Agreement but which supplement the terms thereof.

Pursuant to the Agreement, it is anticipated that the Parties will participate
in the economic costs and returns/profits of the Target Therapy commercialized
under the Agreement, pursuant to an allocation to be agreed upon through the
developmental process and ultimate commercialization of the Target Therapy. In
the event that the Parties are not able to agree on provisions for revenue
sharing for PPH and SPH, then the Parties shall allocate revenues such that
MiniMed shall receive the greater of (a) [ ] of revenues derived from
commercialization of the Target Therapy or (b) $5,000 per patient per year.

The Parties recognize and agree that the flexibility of economic terms
contemplated by the Agreement are appropriate, and the Parties shall endeavor to
cooperate in good faith to allocate revenues on the basis of the criteria set
forth in the Agreement. The allocation set forth in this Letter Agreement
provides a mechanism by which the Parties shall allocate revenues if,-despite
good faith efforts, the Parties are unable to so agree.

The Parties further agree that the Managing Committee shall establish a mutually
agreeable, reasonable criteria whereby the Agreement shall be subject to
termination in the event the Target Therapy (a) is determined not to be
clinically feasible, (b) does not receive regulatory approval or (c) otherwise
is not commercially viable. Such provisions shall be deemed to be an amendment
to the Agreement.

If this letter is in agreement with your understanding of our discussions on the
subject, please so indicate by countersigning below where your name appears.

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<PAGE> 23

Thank you for your continued cooperation in connection with this matter. We look
forward to a long and mutually rewarding business arrangement.

Sincerely,

MINIMED INC.

By: /s/ Eric S. Kentor Date: 9/3/97
---------------------------------- -------------------
Eric S. Kentor
Senior Vice President

ACCEPTED AND AGREED TO:

LRX Pharmaceuticals, Inc.

By: /s/ Gilles Cloutier Date: 9/4/97
---------------------------------- -------------------
Gilles Cloutier, Ph.D.
Executive Vice President for
Business Development

<PAGE> 1
EXHIBIT 23.1

The Board of Directors
United Therapeutics Corporation:

We consent to the use of our report included herein and to the reference to our
firm under the headings "Selected Financial Data" and "Experts" in the
prospectus.

KPMG LLP

McLean, Virginia
June 11, 1999