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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-26301
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United Therapeutics Corporation
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(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 52-1984749
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(State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification No.)
Organization)
1110 Spring Street, Silver Spring, MD 20910
----------------------------------------------------- ----------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
</TABLE>
Registrant's Telephone Number, Including Area Code (301) 608-9292
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- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check X whether the registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes X No
--- ---
The number of shares outstanding of the issuer's common stock, par value $.01
per share, as of May 10, 2000 was 18,578,597
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INDEX
PART I. FINANCIAL INFORMATION (UNAUDITED) PAGE
Item 1. Financial Statements
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 8
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 8
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 11
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED THERAPEUTICS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31,
(UNAUDITED) 1999
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<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $102,787,915 $ 18,279,883
Investments 13,839,355 33,315,914
Accounts receivable 425,080 362,268
Inventories 723,652 259,861
Prepaid expense 292,780 79,981
Other current assets 433,429 358,456
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Total current assets 118,502,211 52,656,363
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Property, plant, and equipment, net 3,877,387 3,791,517
Certificate of deposit 547,306 539,545
Deferred offering costs - 159,418
Goodwill and other intangible assets, net 2,536,426 2,690,533
Investment in affiliate 4,783,394 -
Other 157,777 105,759
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Total assets $130,404,501 $ 59,943,135
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 2,876,644 $ 2,348,090
Accrued expenses 2,111,184 2,107,805
Payroll taxes withheld - 64,537
Current portion of notes and leases payable 43,701 56,786
------------ ------------
Total current liabilities 5,031,529 4,577,218
Notes and leases payable, excluding current
portion 1,776,565 1,783,705
Other liabilities 13,821 16,662
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Total liabilities 6,821,915 6,377,585
Stockholders equity:
Preferred stock, par value $.01, 10,000,000 shares - -
authorized, no shares issued
Common stock, par value $.01, 100,000,000 185,509 160,032
shares authorized, 18,550,937 and 16,003,218
shares issued and outstanding at March 31,
2000 and December 31, 1999, respectively
Additional paid-in capital 180,582,072 102,678,916
Accumulated deficit (57,184,995) (49,273,398)
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Total stockholders' equity 123,582,586 53,565,550
------------ ------------
Total liabilities and stockholders' equity $130,404,501 $ 59,943,135
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
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2000 1999
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<S> <C> <C>
Revenues:
Sales $ 259,397 $ -
Grant revenue 50,000 53,750
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Total revenues 309,397 53,750
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Operating expenses:
Research and development 5,776,749 11,611,458
General and administrative 3,801,150 847,949
Cost of sales 220,283 -
----------- -----------
Total operating expenses 9,798,182 12,459,407
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Loss from operations (9,488,785) (12,405,657)
Other income (expense):
Interest income 1,557,858 178,090
Interest expense (27,996) (6,972)
Other - net 47,326 -
----------- -----------
Total other income 1,577,188 171,118
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Net loss before income tax (7,911,597) (12,234,539)
Income tax - 3,454
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Net loss $(7,911,597) $(12,237,993)
=========== =============
Net loss per common share -
basic and diluted $ (.44) $ (1.19)
=========== ============
Weighted average number of
common shares outstanding -
basic and diluted 18,053,256 10,255,857
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
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2000 1999
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (7,911,597) $(12,237,993)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 225,645 23,782
Stock issued for exclusive license agreement - 9,000,000
Stock grant to Columbia University 749,967 -
Stock and options issued to employees and
consultants 583,730 34,627
Amortization of discount on investments (349,441) -
Changes in operating assets and liabilities:
Accounts receivable (62,812) (53,750)
Inventories (463,791) -
Prepaid expenses (212,799) -
Other current assets (74,973) -
Other assets (52,018) (20,964)
Accounts payable 528,554 28,475
Accrued expenses 3,379 214,985
Payroll taxes withheld (64,537) (16,129)
Other liabilities (2,841) -
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Net cash used in operating activities (7,103,534) (3,026,967)
Cash flows used in investing activities:
Purchases of property, plant, and equipment (157,408) (126,444)
Acquisition of Synergy Pharmaceuticals, Inc. (3,053,725) -
Purchases of investments and certificate of deposit (7,761) (7,410)
Sales and maturities of investments 19,826,000 10,023,190
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Net cash used in investing activities 16,607,106 9,889,336
Cash flows from financing activities:
Proceeds from issuance of common stock 74,805,805 1,995,316
Principal payments on notes payable (5,540) (990)
Proceeds from the exercise of stock options 59,462 -
Principal payments on capital lease obligations (14,685) (372)
Deferred offering costs 159,418 (206,050)
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Net cash provided by financing activities 75,004,460 1,787,904
Net increase in cash and cash equivalents 84,508,032 8,650,273
Cash and cash equivalents, beginning of period 18,279,883 6,779,067
------------- -------------
Cash and cash equivalents, end of period $ 102,787,915 $ 15,429,340
============= =============
Supplemental schedule of cash flow information -
cash paid for interest $ 27,996 $ 6,972
============= =============
Noncash investing and financing activities -
stock issued for investment in affiliate $ 1,729,669 $ -
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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UNITED THERAPEUTICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. ORGANIZATION AND BUSINESS DESCRIPTION
United Therapeutics Corporation (United Therapeutics) was incorporated
on June 26, 1996 under the laws of the State of Delaware. United Therapeutics 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 current focus of United
Therapeutics is the development of therapies to treat vascular, inflammatory and
infectious disease.
United Therapeutics has five wholly owned subsidiaries: Lung Rx, Inc.,
Unither Pharmaceuticals, Inc., Unither Telemedicine Services Corporation,
SynQuest Inc. and United Therapeutics Europe Ltd.
2. BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared, without audit, pursuant to Regulation S-X of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. These consolidated financial statements should be
read in conjunction with the audited financial statements and notes thereto
contained in United Therapeutics' Annual Report on Form 10-K for the year ended
December 31, 1999 as filed with the Securities and Exchange Commission.
In the opinion of United Therapeutics' management, any adjustments
contained in the accompanying unaudited consolidated financial statements are of
a normal recurring nature, necessary to present fairly its financial position as
of March 31, 2000 and its results of operations and cashflows for the three
month periods ended March 31, 2000 and 1999. Interim results are not necessarily
indicative of results for an entire year.
3. MARKETABLE INVESTMENTS
Investments at March 31, 2000 consist of a marketable debt security
maturing in April 2000.
4. INVESTMENT IN AFFILIATE AND EXCLUSIVE LICENSE AGREEMENT
In March 2000, Unither Pharmaceuticals, Inc. (Unither), a
wholly owned subsidiary of United Therapeutics, entered into a license
agreement with Synergy Pharmaceuticals, Inc. (Synergy) to obtain from
Synergy the exclusive worldwide rights to certain patents relating to
anti-viral compounds. Unither paid Synergy a $100,000 license fee which
was expensed as research and development. The agreement conditionally
requires that Unither pay Synergy milestone payments of up to $22.2
million for each FDA-approved product plus royalties ranging from 6
percent to 12.25 percent, subject to reductions, based on net sales.
Additionally, Unither acquired 15 percent of the outstanding stock of
Synergy for a total of $5 million. The purchase price was paid with $3
million in cash and 21,978 shares of common stock of United
Therapeutics valued at approximately $2 million. As part of these
transactions, Unither received an exclusive option to purchase the
remaining stock of Synergy at its fair value to be determined in the
future in accordance with the terms of the contract.
At March 31, 2000, the investment in Synergy totaled approximately $4.8
million. This investment is being accounted for under the cost method.
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5. INVENTORIES
United Therapeutics manufacturers certain compounds and purchases
medical supplies for use in its ongoing clinical trials. These inventories are
accounted for under the first-in, first-out method. At March 31, 2000 and
December 31, 1999, inventories consisted of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
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<S> <C> <C>
Uniprost (in process) $ 579,841 $ 259,861
Medical supplies 143,811 -
------------------ -----------------
$ 723,652 $ 259,861
================== =================
</TABLE>
6. PRIVATE PLACEMENT OF COMMON STOCK
In December 1999, United Therapeutics agreed to the sale of 2,500,000
shares of common stock at $32.00 per share in a private placement. The private
placement closed and settled in January 2000. Net proceeds, after deducting
commissions and offering expenses were approximately $74.8 million. The common
stock was registered for resale with the SEC in a filing that was declared
effective on January 18, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and related notes appearing in the United Therapeutics'
Annual Report on Form 10-K for the year ended December 31, 1999. The following
discussion contains forward-looking statements concerning the cash needed for
current research and development contract obligations through the end of 2000
and the adequacy of United Therapeutics' resources to fund operations through
2002. These forward-looking statements reflect the plans and estimated beliefs
of management as of the date of this report. Actual results could differ
materially from those anticipated in the forward-looking statements. Factors
that could cause or contribute to such differences include those discussed below
and in the section "Risk Factors" in the Annual Report and the accuracy of
United Therapeutics' assumptions concerning its contract research needs and
future milestone and royalty payments.
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 its inception, has devoted substantially all of its
resources to its research and development programs. United Therapeutics has
generated no pharmaceutical product revenues and has funded its operations
primarily from the proceeds of the sale of its equity securities. United
Therapeutics operates with a minimal number of employees and has contracted with
qualified third parties for substantially all pharmaceutical development
activities, including certain key aspects of clinical trials.
United Therapeutics has incurred net losses each year since inception
and had an accumulated deficit of $57.2 million at March 31, 2000. United
Therapeutics expects to continue to incur net losses and cannot provide
assurances 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 its lead product, Uniprost, and other
products. It is anticipated that approximately $19.5 million in cash will be
used for the remainder of 2000 under these agreements. These expenses will be
funded from existing working capital.
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FINANCIAL POSITION
On January 18, 2000, United Therapeutics closed a private placement
sale of 2.5 million shares of common stock at $32.00 per share. United
Therapeutics received net proceeds, after deducting commissions and offering
expenses, of approximately $74.8 million.
Cash, cash equivalents and short-term investments at March 31, 2000
were $116.6 million as compared to $51.6 million at December 31, 1999. The
increase of approximately $65.0 million is due to receipt of the net proceeds
from the private placement which closed in January 2000 less amounts used in
operations during the three month period ended March 31, 2000.
Common stock and additional paid-in capital at March 31, 2000 increased
as compared to amounts at December 31, 1999. This increase of approximately
$77.9 million was due primarily to the net proceeds from the private placement
sale which closed in January 2000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenue for the three months ended March 31, 2000 was approximately
$309,000, as compared to $54,000 for the same period in 1999. Approximately
$50,000 of these revenues were earned under the "orphan drug" grant awarded by
the FDA related to United Therapeutics' development of Uniprost for the
treatment of primary pulmonary hypertension. The FDA may designate a product as
an "orphan drug" if the drug is one intended to treat a rare disease or
condition. Approximately $259,000 of these revenues were earned by SynQuest,
United Therapeutics' wholly owned subsidiary, for the synthesis and manufacture
of complex molecules for third parties.
Research and development expenses consist primarily of costs to acquire
pharmaceutical products and product rights for development and amounts paid to
contract research organizations, hospitals and laboratories for the provision of
services and materials for drug development and clinical trials. Research and
development expenses were $5.8 million for the three months ended March 31,
2000, as compared to $11.6 million for the three months ended March 31, 1999.
These expenses increased approximately $2.7 million related to patient
enrollment in United Therapeutics' clinical trials of Uniprost and other
products and approximately $500,000 related to increased staffing to support
expanded research and development. The net decrease from the prior year period
reflects the expenditure in the prior year period of $9.1 million in licensing
fees (consisting of $100,000 in cash and common stock valued at $9.0 million) in
1999 to obtain the exclusive rights to develop Beraprost in the United States
and Canada.
General and administrative expenses consist primarily of salaries,
office expenses and professional fees. General and administrative expenses were
$3.8 million for the three months ended March 31, 2000, as compared to $848,000
for the three months ended March 31, 1999. This increase was due primarily to
nonrecurring grants of approximately $2.0 million of stock and options, as well
as increased staffing and related travel to support expanded operations.
Interest income for the three months ended March 31, 2000 was $1.6
million, as compared to $178,000 for the three months ended March 31, 1999. This
increase was attributable primarily to an increase in the amount of cash
available for investing resulting from sales of common stock since March 31,
1999, less amounts used for operations.
LIQUIDITY AND CAPITAL RESOURCES
Until June 1999, United Therapeutics financed its operations
principally through various private placements of common stock. On June 17,
1999, United Therapeutics completed an initial public offering of 4.5 million
shares of common stock at $12.00 per share. Net proceeds to United Therapeutics,
after deducting underwriting commissions and offering expenses, were
approximately $48.9 million. On July 16, 1999, United Therapeutics' closed on
the sale of 675,000 over-allotment shares to its underwriters and
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received net proceeds, after deducting underwriting commissions and offering
expenses, of approximately $7.5 million. On January 18, 2000, United
Therapeutics' closed on the sale of 2.5 million shares of common stock in a
private placement and received net proceeds, after deducting underwriting
commissions and offering expenses, of approximately $74.8 million.
United Therapeutics' working capital at March 31, 2000 was $113.5
million, as compared with $48.1 million at December 31, 1999. Current
liabilities at March 31, 2000 were approximately $5.0 million, as compared with
$4.6 million at December 31, 1999. United Therapeutics' debt at March 31, 2000
and December 31, 1999 was approximately $1.8 million and consisted of equipment
leases and two mortgage notes, one secured by a certificate of deposit, and both
secured by the buildings and property owned by United Therapeutics located at
1106 - 1110 Spring Street in Silver Spring, Maryland and are due in monthly
installments over 30 years.
Net cash used in operating activities was approximately $7.1 million
and $3.0 million for the three months ended March 31, 2000 and 1999,
respectively. The increase resulted from the expansion of United Therapeutics'
operations, particularly with respect to increased costs for the Uniprost and
other product trials. For the three months ended March 31, 2000 and 1999, United
Therapeutics invested approximately $157,000 and $126,000, respectively, in cash
for property, plant, and equipment. Net cash provided by financing activities
was approximately $75.0 million and $1.8 million for the three months ended
March 31, 2000 and 1999, respectively. Cash flows from financing activities for
the three months ended March 31, 2000 were derived primarily from the private
placement of common stock in January 2000. Cash flows from financing activities
for the three months ended March 31, 1999 were derived primarily from private
equity financings.
United Therapeutics has contracted with various companies and research
organizations to coordinate and perform clinical trials and to provide other
services related to the development of Uniprost and other products. It is
anticipated that approximately $19.5 million in cash will be used for the
remainder of 2000 under these agreements. These expenses will be funded from
existing working capital. United Therapeutics expects to make milestone payments
of up to approximately $525,000 during 2000. United Therapeutics does not expect
to make any royalty payments during 2000.
United Therapeutics expects that 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 Uniprost 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;
Development of manufacturing 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; and
Establishment of additional strategic or licensing
arrangements with other companies.
As of December 31, 1999, United Therapeutics had available
approximately $33.6 million in net operating loss carryforwards and $11.5
million in business tax credit carryforwards for federal income tax purposes
that expire at various dates through 2018. As of March 31, 2000, United
Therapeutics had available approximately $38.8 million in net operating loss
carryforwards and $12.0 million in business tax credit carryforwards. United
Therapeutics' ability to utilize its net operating loss and general business tax
credit carryforwards may be limited in the future if it is determined that
United Therapeutics experienced an ownership change, as defined in Section 382
of the Internal Revenue Code, as a result of prior
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transactions/and or future transactions. However, these net operating loss and
general business tax credit carryforwards, if subject to limitation arising from
an earlier Section 382 ownership change, would be fully available to offset
income and taxes, as applicable, during their carryforward lives.
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, as amended, for fiscal quarters beginning after June 15, 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 December 1999, the SEC issued Staff Accounting Bulletin (SAB) No.
101, "Revenue Recognition in Financial Statements," which is required to be
implemented in the quarter ending June 30, 2000. United Therapeutics is
currently analyzing the potential impact SAB No. 101 could have on its revenue
recognition policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
United Therapeutics does not have significant exposure to market risks
associated with changes in interest rates related to its corporate and
government debt securities held as of March 31, 2000.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) During the three month period ended March 31, 2000, United
Therapeutics sold the following securities in reliance upon Section 4(2) and/or
Regulation D of the Securities Act of 1933, as amended:
Private Placement of Common Stock
In January 2000, United Therapeutics closed on the sale of 2,500,000
shares of its common stock, in a private placement to accredited investors
pursuant to Regulation D of the Securities Act of 1933. The aggregate offering
price for the common stock was $80,000,000. The investors were BayStar Capital,
L.P., BayStar International Ltd., SMALLCAP World Fund, Inc., Franklin Aggressive
Growth Fund, Inc., Franklin Biotechnology Discovery Fund, Inc., Galleon
Healthcare Partners, L.P., Galleon Healthcare Overseas, Ltd., Putnam Health
Sciences Trust, Putnam Capital Appreciation Fund, Putnam Variable Trust - VT
Health Sciences Fund, Putnam Investment Funds - Putnam Capital Opportunities
Fund, T. Rowe Price New Horizons Fund, Inc., Toronto Dominion Green Line Health
Sciences Fund, T. Rowe Price Health Sciences Fund, Inc. and Four Partners.
Exclusive License Agreement
In March 2000, United Therapeutics closed on the sale of 21,978 shares
of its common stock to Synergy Pharmaceuticals, Inc. in partial payment of the
purchase price for 15 percent of Synergy's common stock and an option to acquire
the remaining outstanding shares of Synergy. United Therapeutics is relying upon
Section 4(2) of the Securities Act of 1933 for this issuance.
Employee Stock Awards
In March 2000, United Therapeutics issued 4,681 shares of common stock
to two employees pursuant to their employment agreements. The employees were not
directors or officers.
(d) United Therapeutics registered 4,500,000 shares of its common
stock, par value $.01 per share, and an additional 675,000 shares of its common
stock for sale to the underwriters exclusively to
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cover over-allotments, on Registration Statement on Form S-1, Commission File
No. 333-76409. Deutsche Banc Alex. Brown acted as lead manager of the
underwriting. A.G. Edwards & Sons, Inc. and Vector Securities International,
Inc. acted as co-managers. The Securities and Exchange Commission declared
United Therapeutics' registration statement effective on June 17, 1999.
United Therapeutics closed the sale of 4,500,000 shares on June 22,
1999. On July 13, 1999, the underwriters exercised their option to purchase the
over-allotment shares and on July 16, 1999 United Therapeutics closed the sale
of the 675,000 over-allotment shares. The aggregate price of the offering amount
registered, including the over-allotment shares, was $86,250,000 and the
aggregate offering price of the amount sold, including the over-allotment
shares, was $62,100,000. The offering is now terminated.
From June 17, 1999 to March 31, 2000, the amount of expenses incurred
by United Therapeutics due to underwriting discounts and commissions, finders'
fees and expenses paid to or for underwriters for the sale of the 4,500,000
shares was $3,780,000 and approximately $39,300 for other expenses incurred by
United Therapeutics in connection with the offering. Of the $39,300 in other
expenses incurred, approximately $1,800 was paid to Mahon Patusky Rothblatt &
Fisher, Chartered, a law firm for which the Chief Executive Officer of United
Therapeutics serves as uncompensated Of Counsel and the Assistant Secretary
serves as a partner. The net proceeds to United Therapeutics from the offering
of the 4,500,000 shares, after deducting the total expenses described above and
expenses incurred prior to the effectiveness of the registration statement, was
approximately $48.9 million.
On July 13, 1999, the underwriters exercised their option to purchase
the 675,000 over-allotment shares. The amount of expenses incurred by United
Therapeutics due to underwriting discounts and commissions, finders' fees and
expenses paid to or for underwriters for the over-allotment shares was $567,000
and approximately $18,500 for other expenses incurred by United Therapeutics in
connection with the over-allotment exercise. Of the $18,500 in other expenses
incurred, approximately $3,500 was paid to Mahon Patusky Rothblatt & Fisher,
Chartered, a law firm for which the Chief Executive Officer of United
Therapeutics serves as uncompensated Of Counsel and the Assistant Secretary
serves as a partner. The net proceeds to United Therapeutics from the sale of
the 675,000 over-allotment shares, after deducting the total expenses described
above, was approximately $7.5 million.
Since the completion of the initial public offering in June 1999 and
the exercise of the over-allotment shares in July 1999, the net offering
proceeds have been applied to the following uses in the following approximate
amounts: $10.3 million for research and development, $283,000 to purchase
machinery, equipment and leasehold improvement, $4.2 million for working capital
and general corporate purposes (including standard compensation to employees,
officers, and directors), $313,000 to purchase SynQuest, Inc., $3.1 million to
purchase 15 percent of Synergy Pharmaceuticals, Inc., and $455,000 to repay
debt. United Therapeutics has temporarily invested the $37.8 million balance of
the offering proceeds in short-term investments. The short-term investments
consist primarily of high credit quality debt instruments of corporations and
financial institutions with maturities of three months or less when purchased.
Except as indicated, all of the payments described above were direct or indirect
payments to entities or persons other than directors, officers, or greater than
10% owners of any equity securities of United Therapeutics.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 of
Registration Statement on Form S-1, File No. 333-76409).
3.2 Amended and Restated By-Laws of the Registrant (incorporated
by reference to Exhibit 3.2 of Registration Statement on Form
S-1, File No. 333-76409).
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Registration Rights Agreement, dated as of October 30, 1998,
by and among the Registrant, Merrill Lynch KECALP L.P. 1997,
and Merrill Lynch KECALP International
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L.P. 1997 incorporated by reference to Exhibit 4.2 of the
Registrant's Registration Statement on Form S-1 (Registration
No. 333-76409).
4.3 Form of Common Stock Purchase Agreement, executed as of March
1998, by and between the Registrant and each of Community
Investment partners III L.P., LLLP, Mary Ellen and Raul Evelio
Perez, Trustees of the Mary Ellen Perez revocable trust dated
October 28, 1993, Edward D. Jones & Co., Oakwood Investors I,
L.L.C. and James L. Nouss, Jr., incorporated by reference to
Exhibit 4.3 of the Registrant's Registration Statement on Form
S-1 (Registration No. 333-76409).
4.4 Warrant to purchase shares of United Therapeutics common
stock, issued on November 2, 1998 to Cortech, Inc.,
incorporated by reference to Exhibit 4.4 of the Registrant's
Registration Statement on Form S-1 (Registration No.
333-76409).
4.5 Stock Option Grant to purchase shares of United Therapeutics'
common stock, issued on September 16, 1998, to Toray
Industries, Inc., incorporated by reference to Exhibit 4.5 of
the Registrant's Registration Statement on Form S-1
(Registration No. 333-76409).
4.6 Registration Rights Agreement, dated as of October 7, 1999, by
and among the Registrant and Robert M. Moriarty, Ph.D., Raju
Penmasta, Ph.D., Liang Guo, Ph.D., George W. Davis, Esq. And
David Moriarty, incorporated by reference to Exhibit 4.6 of
the Registrant's Registration Statement on Form S-1
(Registration No. 333-76409).
4.7 Form of Purchase Agreement dated as of December 22, 1999
incorporated by reference to Exhibit 4.7 of the Registrant's
Registration Statement on Form S-1 (Registration No.
333-76409).
27 Financial Data Schedule
(b) Reports on Form 8-K
On February 2, 2000, the Registrant filed a Form 8-K dated January 18,
2000 reporting an Item 5 event.
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED THERAPEUTICS CORPORATION
Date: May 12, 2000 /s/ Martine A. Rothblatt
------------------------
By: Martine A. Rothblatt
Title: Chief Executive Officer
/s/ Fred T. Hadeed
------------------
By: Fred T. Hadeed
Title: Chief Financial Officer
11
<PAGE> 14
EXHIBIT INDEX
The following exhibits are filed as a part of this report:
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31,
2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 102,788
<SECURITIES> 13,839
<RECEIVABLES> 425
<ALLOWANCES> 0
<INVENTORY> 724
<CURRENT-ASSETS> 118,502
<PP&E> 4,151
<DEPRECIATION> 274
<TOTAL-ASSETS> 130,405
<CURRENT-LIABILITIES> 5,032
<BONDS> 1,820
186
0
<COMMON> 0
<OTHER-SE> 123,397
<TOTAL-LIABILITY-AND-EQUITY> 130,405
<SALES> 259
<TOTAL-REVENUES> 309
<CGS> 220
<TOTAL-COSTS> 9,578
<OTHER-EXPENSES> (1,605)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> (7,912)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,912)
<EPS-BASIC> (.44)
<EPS-DILUTED> (.44)
</TABLE>
