UNITED THERAPEUTICS Corp (Form: 10-Q, Received: 10/27/2015 06:09:28)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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 September 30, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission file number 0-26301

United Therapeutics Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware		52-1984749
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

1040 Spring Street, Silver Spring, MD		20910
(Address of Principal Executive Offices)		(Zip Code)

(301) 608-9292

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o
(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of the issuer’s common stock, par value $.01 per share, as of October 21, 2015 was 45,629,412.

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INDEX

		Page

Part I.	FINANCIAL INFORMATION (UNAUDITED)	3

Item 1.	Consolidated Financial Statements	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Comprehensive Income	5

	Consolidated Statements of Cash Flows	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

Part II.	OTHER INFORMATION	40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 6.	Exhibits	58

SIGNATURES		59

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PART I. FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

UNITED THERAPEUTICS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	September 30, 2015			December 31, 2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	765,205		$	397,697
Marketable investments	156,630			297,842
Accounts receivable, net of allowance of none for 2015 and 2014	179,642			162,287
Inventories, net	80,844			66,927
Other current assets	46,202			49,444
Total current assets	1,228,523			974,197
Marketable investments	91,706			122,658
Goodwill and other intangibles, net	28,533			29,465
Property, plant and equipment, net	474,770			478,421
Deferred tax assets, net	182,600			181,721
Other assets	153,101			97,948
Total assets	$	2,159,233		$	1,884,410

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	113,346		$	85,382
Convertible notes	30,017			126,414
Share tracking awards plan	214,017			282,101
Other current liabilities	199,962			10,413
Total current liabilities	557,342			504,310
Other liabilities	122,522			114,526
Total liabilities	679,864			618,836
Commitments and contingencies:
Temporary equity	12,499			23,218
Stockholders’ equity:
Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued	—			—
Series A junior participating preferred stock, par value $.01, 100,000 shares authorized, no shares issued	—			—
Common stock, par value $.01, 245,000,000 shares authorized, 68,460,587 and 65,988,561 shares issued, and 45,583,017 and 47,107,709 shares outstanding at September 30, 2015 and December 31, 2014, respectively	685			660
Additional paid-in capital	1,723,888			1,376,141
Accumulated other comprehensive loss	(21,930		)	(16,734		)
Treasury stock, 22,877,570 and 18,880,852 shares at September 30, 2015 and December 31, 2014, respectively	(1,850,882		)	(1,185,825		)
Retained earnings	1,615,109			1,068,114
Total stockholders’ equity	1,466,870			1,242,356
Total liabilities and stockholders’ equity	$	2,159,233		$	1,884,410

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Unaudited)						(Unaudited)
Revenues:
Net product sales	$	384,708		$	328,269		$	1,056,374		$	934,152
Other	1,513			1,681			4,512			8,004
Total revenues	386,221			329,950			1,060,886			942,156
Operating expenses:
Research and development	9,527			118,876			169,150			171,067
Selling, general and administrative	(17,276		)	202,507			304,051			300,753
Cost of product sales	6,891			40,803			43,727			110,113
Total operating expenses	(858		)	362,186			516,928			581,933
Operating income (loss)	387,079			(32,236		)	543,958			360,223
Other (expense) income:
Interest expense	(834		)	(4,709		)	(4,189		)	(14,065		)
Other, net	618			1,112			(1,364		)	4,258
Gain on sale of intangible asset	350,000			—			350,000			—
Total other income (expense), net	349,784			(3,597		)	344,447			(9,807		)
Income (loss) before income taxes	736,863			(35,833		)	888,405			350,416
Income tax (expense) benefit	(272,438		)	10,596			(341,410		)	(126,277		)
Net income (loss)	$	464,425		$	(25,237	)	$	546,995		$	224,139
Net income (loss) per common share:
Basic	$	10.20		$	(0.53	)	$	11.86		$	4.63
Diluted	$	9.24		$	(0.53	)	$	10.58		$	4.12
Weighted average number of common shares outstanding:
Basic	45,531			47,297			46,105			48,427
Diluted	50,239			47,297			51,715			54,360

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Unaudited)						(Unaudited)
Net income (loss)	$	464,425		$	(25,237	)	$	546,995		$	224,139
Other comprehensive income (loss):
Foreign currency translation loss	(2,107		)	(2,538		)	(3,660		)	(2,156		)
Defined benefit pension plan:
Prior service cost arising during period, net of tax	—			—			—			(2,415		)
Actuarial (loss) gain arising during period, net of tax	—			—			(2,110		)	221
Less: amortization of actuarial loss and prior service cost included in net periodic pension cost, net of tax	148			226			629			678
Total defined benefit pension plan, net	148			226			(1,481		)	(1,516		)
Unrealized (loss) gain on available-for-sale securities, net of tax	(41		)	9			(55		)	(75		)
Other comprehensive loss, net of tax	(2,000		)	(2,303		)	(5,196		)	(3,747		)
Comprehensive income (loss)	$	462,425		$	(27,540	)	$	541,799		$	220,392

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30,
	2015			2014
	(Unaudited)
Cash flows from operating activities:
Net income	$	546,995		$	224,139
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	24,960			23,313
Share-based compensation expense	162,886			157,730
Gain on sale of intangible asset	(350,000		)	—
Amortization of debt discount and debt issue costs	5,508			9,968
Amortization of discount or premium on investments	1,866			4,195
Other	(1,528		)	1,478
Excess tax benefits from share-based compensation	(31,379		)	(23,183		)
Changes in operating assets and liabilities:
Accounts receivable	(17,356		)	(13,324		)
Inventories	(7,784		)	(16,870		)
Accounts payable and accrued expenses	25,825			35,855
Other assets and liabilities	(2,747		)	(138,647		)
Net cash provided by operating activities	357,246			264,654

Cash flows from investing activities:
Purchases of property, plant and equipment	(18,256		)	(45,157		)
Purchases of held-to-maturity investments	(62,781		)	(115,170		)
Maturities of held-to-maturity investments	232,424			491,833
Gain on sale of intangible asset	350,000			—
Purchase of investments under the cost method, net	(54,217		)	(45,000		)
Net cash provided by investing activities	447,170			286,506

Cash flows from financing activities:
Principal payments of debt	(107,116		)	—
Payments to repurchase common stock	(394,484		)	(403,158		)
Proceeds from line of credit	—			140,000
Payments on the line of credit	—			(140,000		)
Proceeds from the exercise of stock options	33,019			39,391
Issuance of stock under employee stock purchase plan	3,954			3,329
Excess tax benefits from share-based compensation	31,379			23,183
Net cash used in financing activities	(433,248		)	(337,255		)

Effect of exchange rate changes on cash and cash equivalents	(3,660		)	(872		)
Net increase in cash and cash equivalents	367,508			213,033
Cash and cash equivalents, beginning of period	397,697			284,258
Cash and cash equivalents, end of period	$	765,205		$	497,291

Supplemental schedule of cash flow information:
Cash paid for interest	$	957		$	4,743
Cash paid for income taxes	$	116,906		$	177,683
Non-cash investing activities and financing activities:
Non-cash additions to property, plant and equipment	$	2,428		$	3,298
Issuance of common stock upon conversion of convertible notes	$	270,573		$	—

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(UNAUDITED)

1. Organization and Business Description

United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of innovative products to address the unmet medical needs of patients with chronic and life-threatening cardiovascular and infectious diseases and cancer. As used in these notes to the consolidated financial statements, unless the context otherwise requires, the terms “we”, “us”, “our”, and similar terms refer to United Therapeutics Corporation and its consolidated subsidiaries.

We have approval from the United States Food and Drug Administration (FDA) to market the following therapies: Remodulin ® (treprostinil) Injection (Remodulin), Tyvaso ® (treprostinil) Inhalation Solution (Tyvaso), Adcirca ® (tadalafil) Tablets (Adcirca), Orenitram ® (treprostinil) Extended-Release Tablets (Orenitram) and Unituxin TM (dinutuximab) Injection (Unituxin). Remodulin has also been approved for distribution in various countries outside the United States, and Unituxin was granted marketing authorization by the European Medicines Agency in August 2015. We commenced commercial sales of Orenitram and Unituxin in the U.S. during the second quarter of 2014 and third quarter of 2015, respectively.

2. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information required by United States generally accepted accounting principles (GAAP) for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on February 24, 2015.

In our management’s opinion, the accompanying consolidated financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of September 30, 2015, statements of operations and comprehensive income for the three- and nine-month periods ended September 30, 2015 and September 30, 2014 and cash flows for the nine-month periods ended September 30, 2015 and September 30, 2014. Interim results are not necessarily indicative of results for an entire year. In the operating section of our statement of cash flows, we reclassified the prior period amount within “current and deferred income tax expense” to “other assets and liabilities” to conform with the current period presentation.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09). ASU 2014-09 will eliminate transaction-specific and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. On July 9, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606); Deferral of the Effective Date , which (a) delays the effective date of ASU 2014-09 by one year to annual periods beginning after December 15, 2017 and (b) allows early adoption of the ASU by all entities as of the original effective date for public entities. We are evaluating the transition method we will elect and the effects of the adoption of this ASU on our financial statements.

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In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 requires retrospective adoption and will be effective for us beginning in our first quarter of 2016. Early adoption is permitted. We do not expect the adoption of ASU 2015-03 to have a material impact on our financial statements.

3. Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market (current replacement cost) and consist of the following, net of reserves (in thousands):

	September 30, 2015		December 31, 2014
Raw materials	$	23,316	$	21,317
Work-in-progress	24,092		15,994
Finished goods	33,436		29,616
Total inventories	$	80,844	$	66,927

4. Fair Value Measurements

We account for certain assets and liabilities at fair value and rank these assets within a fair value hierarchy (Level 1, Level 2 or Level 3). Our other current assets and our current liabilities have fair values that approximate their carrying values. Assets and liabilities subject to fair value measurements are as follows (in thousands):

	As of September 30, 2015
	Level 1		Level 2		Level 3		Balance
Assets
Money market funds (1)	$	452,662	$	—	$	—	$	452,662
Federally-sponsored and corporate debt securities (2)	—		248,566		—		248,566
Total assets	$	452,662	$	248,566	$	—	$	701,228
Liabilities
Convertible notes due 2016 (3)	$	90,370	$	—	$	—	$	90,370
Contingent consideration (4)			—		9,700		9,700
Total liabilities	$	90,370	$	—	$	9,700	$	100,070

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	As of December 31, 2014
	Level 1		Level 2		Level 3		Balance
Assets
Money market funds (1)	$	298,416	$	—	$	—	$	298,416
Federally-sponsored and corporate debt securities (2)	—		420,731		—		420,731
Total assets	$	298,416	$	420,731	$	—	$	719,147
Liabilities
Convertible notes due 2016 (3)	$	388,153	$	—	$	—	$	388,153
Contingent consideration (4)	—		—		11,502		11,502
Total liabilities	$	388,153	$	—	$	11,502	$	399,655

(1) Included in cash and cash equivalents on the accompanying consolidated balance sheets.

(2) Included in current and non-current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is principally measured or corroborated by trade data for identical securities in which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. See also Note 5— Investments — Marketable Investments—Held-to-Maturity Investments to these consolidated financial statements.

(3) Included in convertible notes on the accompanying consolidated balance sheets. The fair value of our Convertible Notes is estimated using Level 1 observable inputs since our Convertible Notes are trading with sufficient frequency such that we believe related pricing can be used as the primary basis for measuring their fair value. As of September 30, 2015 and December 31, 2014, the fair value of the Convertible Notes was substantially higher than their book value. This was primarily due to the excess conversion value of the notes compared to the notes’ par value, and the fact that any such excess would be paid in shares of our common stock.

(4) Included in other liabilities on the accompanying consolidated balance sheets. The fair value of contingent consideration has been estimated using probability weighted discounted cash flow models (DCF). The DCFs incorporate Level 3 inputs including estimated discount rates that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, in part, based on the requirements specific to each acquisition agreement. We analyze and evaluate these fair value measurements quarterly to determine whether valuation inputs continue to be relevant and appropriate or whether current period developments warrant adjustments to valuation inputs and related measurements.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The fair values of our marketable investments and our Convertible Notes are reported above within the fair value hierarchy. Refer to Note 8— Debt .

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5. Investments

Marketable Investments

Marketable investments classified as held-to-maturity consist of the following (in thousands):

As of September 30, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Government-sponsored enterprises	$	72,473	$	56	$	(10	)	$	72,519
Corporate notes and bonds	175,863		191		(7		)	176,047
Total	$	248,336	$	247	$	(17	)	$	248,566
Reported under the following captions on the consolidated balance sheet:
Current marketable investments	$	156,630
Noncurrent marketable investments	91,706
	$	248,336

As of December 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Government-sponsored enterprises	$	127,212	$	118	$	(39	)	$	127,291
Corporate notes and bonds	293,288		260		(108		)	293,440
Total	$	420,500	$	378	$	(147	)	$	420,731
Reported under the following captions on the consolidated balance sheet:
Current marketable investments	$	297,842
Noncurrent marketable investments	122,658
	$	420,500

The following table summarizes gross unrealized losses and the length of time marketable investments have been in a continuous unrealized loss position (in thousands):

	As of September 30, 2015					As of December 31, 2014
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
Government-sponsored enterprises:
Continuous unrealized loss position less than one year	$	9,990	$	(10	)	$	15,293	$	(39	)
Continuous unrealized loss position greater than one year	—		—			—		—
	9,990		(10		)	15,293		(39		)
Corporate notes and bonds:
Continuous unrealized loss position less than one year	23,442		(7		)	86,824		(97		)
Continuous unrealized loss position greater than one year	—		—			3,443		(11		)
	23,442		(7		)	90,267		(108		)
Total	$	33,432	$	(17	)	$	105,560	$	(147	)

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We attribute gross unrealized losses pertaining to our held-to-maturity securities as of September 30, 2015 and December 31, 2014 to the variability in related market interest rates. We do not intend to sell these securities, nor is it more likely than not that we will be required to sell them prior to the end of their contractual terms. Furthermore, we do not believe that these securities expose us to undue market risk or counterparty credit risk. As such, we do not consider these securities to be other than temporarily impaired.

The following table summarizes the contractual maturities of held-to-maturity marketable investments (in thousands):

	September 30, 2015
	Amortized Cost		Fair Value
Due in less than one year	$	156,630	$	156,774
Due in one to two years	91,706		91,792
Due in three to five years	—		—
Due after five years	—		—
Total	$	248,336	$	248,566

Investments Held at Cost

As of September 30, 2015, we hold non-controlling equity investments of $137.2 million in privately-held corporations, including a $100.0 million investment in the preferred stock of Synthetic Genomics Inc., which we purchased in separate $50.0 million transactions in May 2014 and September 2015. We account for these investments under the cost method since we do not have the ability to exercise significant influence over these companies and their fair values are not readily determinable. The fair value of these investments has not been estimated at September 30, 2015, as we have not identified any events or developments indicating that their carrying amounts may be impaired. We include these investments within other assets on our accompanying consolidated balance sheets.

6. Goodwill and Other Intangible Assets

Goodwill and other intangible assets comprise the following (in thousands):

	As of September 30, 2015							As of December 31, 2014
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Goodwill	$	10,264	$	—		$	10,264	$	10,264	$	—		$	10,264
Other intangible assets:
Technology, patents and trade names	6,494		(4,660		)	1,834		6,494		(4,100		)	2,394
In-process, research and development	15,500		—			15,500		15,500		—			15,500
Customer relationships and non-compete agreements	4,369		(3,434		)	935		4,369		(3,062		)	1,307
Contract-based	1,270		(1,270		)	—		1,270		(1,270		)	—
Total	$	37,897	$	(9,364	)	$	28,533	$	37,897	$	(8,432	)	$	29,465

In September 2015, we sold the Rare Pediatric Priority Review Voucher (PPRV) we received from the FDA in connection with the approval of our Biologics License Application for Unituxin. In exchange for the voucher we received $350.0 million from AbbVie Ireland Unlimited Company (AbbVie), a wholly-owned subsidiary of AbbVie Inc. The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset, as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.

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7. Share Tracking Award Plans

We previously issued awards under the United Therapeutics Corporation Share Tracking Awards Plan, adopted in June 2008 (2008 STAP) and the United Therapeutics Corporation 2011 Share Tracking Awards Plan, adopted in March 2011 (2011 STAP). We refer to the 2008 STAP and the 2011 STAP collectively as the “STAP” and awards granted and/or outstanding under either of these plans as “STAP awards.” STAP awards convey the right to receive in cash an amount equal to the appreciation of our common stock, which is measured as the increase in the closing price of our common stock between the dates of grant and exercise. STAP awards expire on the tenth anniversary of the date of grant, and in most cases they vest in equal increments on each anniversary of the grant date over a four-year period. We discontinued the issuance of STAP awards on June 26, 2015, when our shareholders approved a broad-based stock incentive plan enabling us to grant stock options and other forms of equity compensation to our employees. See Note 10 —Stockholders’ Equity to these consolidated financial statements for information on the stock incentive plan.

The aggregate STAP liability balance was $268.5 million and $322.7 million at September 30, 2015 and December 31, 2014, respectively, of which $54.5 million and $40.6 million, respectively, have been classified as non-current liabilities under the caption “other liabilities” on our consolidated balance sheets based on their vesting terms.

Estimating the fair value of STAP awards requires the use of certain inputs that can materially impact the determination of fair value and the amount of compensation expense (benefit) we recognize. Inputs used in estimating fair value include the price of our common stock, the expected volatility of the price of our common stock, the risk-free interest rate, the expected term of STAP awards, the expected forfeiture rate and the expected dividend yield. The fair value of the STAP awards is measured each financial reporting period because the awards are settled in cash.

The table below includes the assumptions used to measure the fair value of STAP awards:

	September 30, 2015		September 30, 2014
Expected volatility	34.5	%	34.9	%
Risk-free interest rate	1.2	%	1.3	%
Expected term of awards (in years)	4.1		3.9
Expected forfeiture rate	9.6	%	9.9	%
Expected dividend yield	0.0	%	0.0	%

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A summary of the activity and status of STAP awards is presented below:

	Number of Awards		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at January 1, 2015	7,716,424		$	62.59
Granted	1,655,388		159.68
Exercised	(1,942,757	)	56.15
Forfeited	(176,722	)	88.93
Outstanding at September 30, 2015	7,252,333		$	85.83	7.5	$	375,648
Exercisable at September 30, 2015	2,416,505		$	66.02	6.3	$	161,321
Expected to vest at September 30, 2015	4,363,029		$	96.11	8.2	$	191,867

The weighted average grant-date fair value of STAP awards granted during the nine-month periods ended September 30, 2015 and September 30, 2014 was $58.52 and $33.61, respectively.

Share-based compensation expense (benefit) recognized in connection with STAP awards is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Research and development	$	(31,090	)	$	82,404		$	57,132		$	56,659
Selling, general and administrative	(82,384		)	100,541			99,654			66,530
Cost of product sales	(8,129		)	8,779			2,762			5,432
Share-based compensation (benefit) expense before taxes	(121,603		)	191,724			159,548			128,621
Related income tax benefit (expense)	45,914			(69,596		)	(60,241		)	(46,689		)
Share-based compensation (benefit) expense, net of taxes	$	(75,689	)	$	122,128		$	99,307		$	81,932
Share-based compensation expense capitalized as part of inventory	$	664		$	467		$	4,578		$	1,028

Cash paid to settle STAP awards exercised during the nine-month periods ended September 30, 2015 and September 30, 2014 was $218.2 million and $97.9 million, respectively.

8. Debt

Line of Credit

In September 2013, we entered into a credit agreement with Wells Fargo Bank, National Association (Wells Fargo) providing us a $75.0 million revolving loan facility, which may be increased by up to an additional $75.0 million provided certain conditions are met. At our option, amounts borrowed under this credit agreement bear interest at either the one-month LIBOR rate plus a 0.50 percent margin, or a fluctuating base rate excluding any margin. In addition, we are subject to a monthly commitment fee of 0.06 percent per annum on the average daily unused balance of the facility. In July 2015, we amended the Credit Agreement solely to extend its maturity to September 30, 2017. Amounts borrowed under the credit agreement are secured by certain of our marketable investments. As of September 30, 2015, we had no outstanding balance on the facility. This credit agreement does not contain any financial covenants.

Convertible Notes Due 2016

In October 2011, we issued $250.0 million in aggregate principal value 1.0 percent Convertible Senior Notes due September 15, 2016 (Convertible Notes). The Convertible Notes are unsecured, unsubordinated debt obligations that rank equally with all of our other unsecured and unsubordinated indebtedness. We pay interest semi-annually on March 15 and September 15 of each year. The initial conversion price is $47.69 per share and the number of underlying shares used to determine the aggregate consideration upon conversion is approximately 5.2 million shares.

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At September 30, 2015, the aggregate conversion value of the Convertible Notes exceeded their par value by $55.4 million using a conversion price of $131.24, the closing price of our common stock on September 30, 2015.

During the three-month period ended September 30, 2015, we settled conversion requests representing $2.9 million in principal value of our Convertible Notes. We paid $2.9 million in principal and issued 43,000 shares of our common stock during the settlement process. We received 43,000 shares of our common stock under our note hedge from Deutsche Bank AG London (DB London) which we placed into our treasury stock account. We recognized a $60,000 extinguishment loss with the settlement of these conversions. As of September 30, 2015, there were 663,000 shares of our common stock that could be issued upon future conversions of our outstanding Convertible Notes.

We have received additional conversion requests representing $26.0 million in principal value of our Convertible Notes, which will settle in the fourth quarter of 2015. Based on our stock price as of September 30, 2015, we expect that the full $26.0 million of principal will be paid in cash to the converting note holders, and that we will be required to issue shares of our common stock. We expect to receive an equal number of shares of our common stock under our note hedge with DB London and to recognize an estimated $395,000 extinguishment loss upon settlement of these conversions.

Interest expense incurred in connection with our Convertible Notes consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Contractual coupon rate of interest	$	63	$	582	$	390	$	1,832
Discount amortization	411		2,989		2,833		8,856
Interest expense—convertible notes	$	474	$	3,571	$	3,223	$	10,688

Components comprising the carrying value of the Convertible Notes include the following (in thousands):

	September 30, 2015			December 31, 2014
Principal balance	$	31,634		$	138,750
Discount, net of accumulated amortization of $5,714 and $19,819	(1,617		)	(12,336		)
Carrying amount	$	30,017		$	126,414

9. Temporary Equity

Temporary equity includes securities that: (1) have redemption features that are outside our control; (2) are not classified as an asset or liability; (3) are excluded from permanent stockholders’ equity; and (4) are not mandatorily redeemable. Amounts included in temporary equity relate to securities that are redeemable at a fixed or determinable price.

Components comprising the carrying value of temporary equity include the following (in thousands):

	September 30, 2015		December 31, 2014
Reclassification of Equity Component (1)	$	1,617	$	12,336
Common stock subject to repurchase (2)	10,882		10,882
Total	$	12,499	$	23,218

(1) Represents the reclassification of the Equity Component equal to the unamortized debt discount of our Convertible Notes as of September 30, 2015 and December 31, 2014, respectively, from additional paid-in capital to temporary equity as our Convertible Notes were convertible at the election of their holders as noted above in Note 8— Debt — Convertible Notes Due 2016 .

(2) In connection with our amended 2007 agreement with Toray Industries Inc. (Toray), we issued 400,000 shares of our common stock and provided Toray the right to require us to repurchase the shares at a price of $27.21 per share.

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10. Stockholders’ Equity

Earnings Per Common Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, adjusted for the potential dilutive effect of other securities if such securities were converted or exercised.

The components of basic and diluted earnings per common share comprised the following (in thousands, except per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014

Net income (loss) (numerator)	$	464,425	$	(25,237	)	$	546,995	$	224,139
Denominator:
Weighted average outstanding shares — basic	45,531		47,297			46,105		48,427
Effect of dilutive securities (1) :
Convertible notes (2)	479		—			1,141		2,753
Warrants	3,034		—			3,076		1,715
Stock options and employee stock purchase plan	1,195		—			1,393		1,465
Weighted average shares — diluted	50,239		47,297			51,715		54,360
Earnings (loss) per common share:
Basic	$	10.20	$	(0.53	)	$	11.86	$	4.63
Diluted	$	9.24	$	(0.53	)	$	10.58	$	4.12

Stock options, warrants, and shares of our common stock issued under our Convertible Notes excluded from calculation (2)	3,026		15,589			4,112		9,769

(1) Calculated using the treasury stock method.

(2) Certain stock options and warrants were excluded from the computation of diluted earnings per share because their impact would be anti-dilutive. Under our convertible note hedge agreement, we are entitled to receive shares required to be issued to investors upon conversion of our Convertible Notes. Since related shares used to compute dilutive earnings per share would be anti-dilutive, they have been excluded from the calculation above.

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Stock Options

As of September 30, 2015, we have two shareholder-approved equity incentive plans: the United Therapeutics Corporation Amended and Restated Equity Incentive Plan (the 1999 Plan) and the United Therapeutics Corporation 2015 Stock Incentive Plan (the 2015 Plan). The 2015 Plan was approved by our shareholders on June 26, 2015 and provides for the issuance of up to 6,150,000 shares of our common stock pursuant to awards granted under the 2015 Plan. No further awards will be granted under the 1999 Plan.

Although the terms of the 1999 Plan and the 2015 Plan contemplate a variety of awards, to date all awards granted under these plans have been in the form of stock options. We estimate the fair value of stock options using the Black-Scholes-Merton valuation model, which requires us to make certain assumptions that can materially impact the estimation of fair value and related compensation expense. These assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, the expected term of stock option awards and the expected dividend yield. We did not grant any stock options under the 1999 Plan during the nine-month periods ended September 30, 2015 and September 30, 2014. From June 26, 2015, the date the 2015 Plan was approved, through September 30, 2015, we have granted 162,250 stock options under the 2015 Plan. There have been no exercises or forfeitures under the 2015 Plan. The stock options granted under the 2015 Plan through September 30, 2015 have a weighted average grant-date fair value of $60.77. We recorded $2.5 million in share-based compensation expense for the nine-months ended September 30, 2015 related to stock options granted under the 2015 Plan. The share-based compensation expense related to stock options granted under the 2015 Plan is reflected in selling, general and administrative within the statement of operations.

The table below includes the assumptions used to measure the fair value of the stock options granted under the 2015 Plan:

	September 30, 2015
Expected volatility	33.1	%
Risk-free interest rate	2.0	%
Expected term of awards (in years)	5.8
Expected forfeiture rate	1.0	%
Expected dividend yield	0.0	%

A summary of the activity and status of stock options under both the 1999 Plan and the 2015 Plan during the nine-month period ended September 30, 2015 is presented below:

	Number of Options		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015	4,054,771		$	76.83
Granted	162,250		174.57
Exercised	(806,755	)	40.90
Forfeited	—		—
Outstanding at September 30, 2015	3,410,266		$	89.99	6.5	$	147,715
Exercisable at September 30, 2015	3,248,016		$	85.76	6.4	$	147,715
Expected to vest at September 30, 2015	161,300		$	174.68	9.8	$	—

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Stock option exercise data is summarized below (dollars in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Number of options exercised	210,256		460,600		807,755		1,177,797
Cash received	$	8,574	$	17,220	$	33,019	$	39,391

Share Repurchases

In June 2014, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock. This program became effective on August 1, 2014, and remained open for one year. During the quarter ended September 30, 2015 we acquired approximately 337,000 shares of our common stock at an aggregate cost of $57.6 million under this repurchase program. In the aggregate, we repurchased approximately 3.3 million shares of common stock under this repurchase program for $500.0 million.

In October 2015, our Board of Directors authorized a new program for the repurchase of up to $500.0 million of our common stock in open or privately negotiated transactions, at our discretion. This program will be effective from January 1, 2016 to December 31, 2016.

11. Accumulated Other Comprehensive Loss

The following table includes changes in accumulated other comprehensive loss by component, net of tax (in thousands):

	Defined Benefit Pension Plan			Foreign Currency Translation Losses			Unrealized Gains (Losses) on Available-for- Sale Securities			Total
Balance, January 1, 2015	$	(6,957	)	$	(9,858	)	$	81		$	(16,734	)
Other comprehensive loss before reclassifications	(2,110		)	(3,660		)	(55		)	(5,825		)
Amounts reclassified from accumulated other comprehensive loss	629			—			—			629
Net current-period other comprehensive loss	(1,481		)	(3,660		)	(55		)	(5,196		)
Balance, September 30, 2015	$	(8,438	)	$	(13,518	)	$	26		$	(21,930	)

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12. Income Taxes

Income tax expense for the three- and nine-month periods ended September 30, 2015 and September 30, 2014 is based on the estimated effective tax rate for the entire year. The estimated annual effective tax rate can be subject to adjustment in subsequent quarterly periods if components used in its estimation are updated or revised. The estimated annual effective tax rates as of September 30, 2015 and September 30, 2014 were approximately 38 percent and approximately 36 percent, respectively. Our 2015 estimated annual effective tax rate increased as of September 30, 2015 primarily due to a decrease in the estimated general business credits as compared to the prior year.

The increase in the other current liabilities account as of September 30, 2015 as compared to the balance as of December 31, 2014 is due to additional state and federal income taxes payable as a result of the increase in the amount of income before income taxes. The gain on the sale of our PPRV to AbbVie for $350.0 million in cash resulted in a $132.1 million tax liability, which is included in the other current liabilities balance as of September 30, 2015. See Note 6 —Goodwill and Other Intangible Assets to these consolidated financial statements for information on the PPRV.

We are subject to federal and state taxation in the United States and various foreign jurisdictions. Currently, our 2011 to 2014 tax years are subject to examination by the Internal Revenue Service and by state taxing authorities.

We are unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

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13. Segment Information

We currently operate as one operating segment. However, our chief operating decision makers regularly review revenues, cost of product sales and gross profit data as a primary measure of performance for each of our five commercial products.

Net revenues, cost of product sales and gross profit for each of our commercial products were as follows (in thousands):

	Three Months Ended September 30,
	Remodulin			Tyvaso		Adcirca		Orenitram		Unituxin			Total
2015
Net revenues	$	150,075		$	121,718	$	73,797	$	34,389	$	4,729		$	384,708
Cost of product sales	(2,242		)	3,517		4,555		2,084		(1,023		)	6,891
Gross profit	$	152,317		$	118,201	$	69,242	$	32,305	$	5,752		$	377,817

2014
Net revenues	$	142,877		$	119,685	$	51,247	$	14,460	$	—		$	328,269
Cost of product sales	16,915			16,878		3,087		3,923		—			40,803
Gross profit	$	125,962		$	102,807	$	48,160	$	10,537	$	—		$	287,466

	Nine Months Ended September 30,
	Remodulin		Tyvaso		Adcirca		Orenitram		Unituxin		Total
2015
Net revenues	$	432,313	$	350,939	$	187,248	$	81,145	$	4,729	$	1,056,374
Cost of product sales	7,105		15,936		11,242		7,556		1,888		43,727
Gross profit	$	425,208	$	335,003	$	176,006	$	73,589	$	2,841	$	1,012,647

2014
Net revenues	$	417,137	$	347,997	$	147,926	$	21,092	$	—	$	934,152
Cost of product sales	44,522		50,076		9,070		6,445		—		110,113
Gross profit	$	372,615	$	297,921	$	138,856	$	14,647	$	—	$	824,039

For the three-month periods ended September 30, 2015 and September 30, 2014, net revenues from our U.S.-based distributors represented 72 percent and 75 percent, respectively, of our total net operating revenues.

For each of the nine-month periods ended September 30, 2015 and September 30, 2014, net revenues from our U.S.-based distributors represented 74 percent and 75 percent, respectively, of our total net operating revenues.

14. Litigation

Sandoz Inc.

In February 2012, we received a Paragraph IV certification notice letter (the Original Notice Letter) from Sandoz Inc. (Sandoz) advising that Sandoz had submitted an abbreviated new drug application (ANDA) to the FDA requesting approval to market a generic version of the 10 mg/mL strength of Remodulin. In December 2012, we received notice (the Second Notice Letter) that Sandoz had amended its previously filed ANDA to request additional approval to market generic versions of the 1 mg/mL, 2.5 mg/mL, and 5 mg/mL strengths of Remodulin. In the Original Notice Letter and the Second Notice Letter, Sandoz stated that it intends to market a generic version of Remodulin before the expiration of the following patents relating to Remodulin: U.S. Patent No. 5,153,222, which expired in October 2014; U.S. Patent No. 6,765,117, which expires in October 2017; and U.S. Patent No. 7,999,007, which expires in March 2029. Each of these patents is listed in the FDA’s Orange Book, which contains a listing of patents covering a drug or biologic or its method of use, and which have been submitted to the FDA by the filer of a New Drug Application or Biologics License Application.

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We responded to the Original Notice Letter by filing a lawsuit in March 2012 against Sandoz in the U.S. District Court for the District of New Jersey alleging patent infringement (the First Action). We responded to the Second Notice Letter by filing an additional lawsuit in January 2013 for patent infringement in the U.S. District Court for the District of New Jersey (the Second Action). Sandoz filed counterclaims in each action alleging that the patents at issue in the litigation are invalid or will not be infringed by the commercial manufacture, use or sale of the proposed product described in Sandoz’s ANDA submission. Shortly before trial, Sandoz withdrew its request to market a generic version of Remodulin before the expiration of U.S. Patent No. 5,153,222, but maintained its request to market a generic version of Remodulin before the expiration of the other two patents. The trial for both lawsuits, limited to U.S. Patent Nos. 6,765,117 and 7,999,007, occurred in May and June 2014 and we received the Court’s decision in August 2014. In that decision, with respect to U.S. Patent No. 6,765,117 the Court both ruled that the patent is valid and enforceable against Sandoz, and enjoined Sandoz from marketing its generic product until the expiration of that patent in October 2017. With respect to U.S. Patent No. 7,999,007, the Court ruled that the patent is valid, but that it would not be infringed by Sandoz’s generic product.

Sandoz appealed the ruling that U.S. Patent No. 6,765,117 is valid and would be infringed, and that U.S. Patent No. 7,999,007 is valid. We filed a cross-appeal challenging the Court’s ruling that U.S. Patent No. 7,999,007 would not be infringed by Sandoz’s generic version of Remodulin.

In July 2014, we received an additional Paragraph IV certification notice letter (Third Notice Letter) from Sandoz, seeking permission to market and sell its generic version of Remodulin before the expiration of U.S. Patent No. 8,497,393, which expires in December 2028 and is also listed in the Orange Book. We responded to Sandoz’s Third Notice Letter by filing a lawsuit in September 2014 in the U.S. District Court for the District of New Jersey for patent infringement with respect to U.S. Patent No. 8,497,393 (the Third Action).

On September 29, 2015, we entered into a Settlement Agreement with Sandoz (the Settlement Agreement) to settle all ongoing litigation between the parties (all three lawsuits described above, including pending appeals) concerning Remodulin patents. Under the Settlement Agreement, we granted Sandoz a non-exclusive license to manufacture and commercialize in the United States the generic version of Remodulin described in Sandoz’s ANDA filing beginning on June 26, 2018, although Sandoz may be permitted to enter the market earlier under certain circumstances. The Settlement Agreement does not grant Sandoz a license to manufacture a generic version of any other product, such as Tyvaso or Orenitram, nor does it grant any rights with respect to any technology associated with the Remodulin Implantable System we are developing in conjunction with Medtronic Inc., or the pre-filled semi-disposable pump system we are developing with DEKA Research & Development Corp. The Settlement Agreement does not grant Sandoz any rights other than those required to launch Sandoz’s generic version of Remodulin.

In accordance with the terms of the Settlement Agreement, the parties have submitted the Settlement Agreement to the U.S. Federal Trade Commission and the U.S. Department of Justice for review. The parties are also taking certain procedural steps to terminate the appeal relating to the First Action and the Second Action. The parties’ claims in the Third Action have been dismissed with prejudice.

Teva Pharmaceuticals USA, Inc.

On July 21, 2014, we received a Paragraph IV certification notice letter from Teva Pharmaceuticals USA, Inc. (Teva) advising that Teva had submitted an ANDA to the FDA requesting approval to market a generic version of Remodulin.

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In its notice letter, Teva states that it intends to market a generic version of Remodulin before the expiration of U.S. Patent Nos. 6,765,117 and 8,497,393, both of which are also the subject of Paragraph IV certifications by Sandoz, as discussed above. Teva’s notice letter states that the ANDA contains a Paragraph IV certification alleging that these patents are not valid, not enforceable and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in Teva’s ANDA submission.

We responded to Teva’s notice letter by filing a lawsuit in September 2014 against Teva in the U.S. District Court for the District of New Jersey alleging infringement of U.S. Patent Nos. 6,765,117, 7,999,007 and 8,497,393, as well as infringement of U.S. Patent Nos. 8,653,137 and 8,658,694, both of which expire in September 2028. Teva has filed its answer to our complaint, and has also filed a counterclaim alleging that the patents at issue in the litigation are invalid or will not be infringed by the commercial manufacture, use or sale of the proposed product described in Teva’s ANDA submission. We have filed an answer to the counterclaim. The parties are conducting discovery in this lawsuit, and trial is scheduled to commence in 2016.

Under the Hatch-Waxman Act, the FDA is automatically precluded from approving Teva’s ANDA for up to 30 months from receipt of Teva’s notice letter or until the issuance of a U.S. District Court decision that is adverse to us, whichever occurs first.

We intend to vigorously enforce our intellectual property rights relating to Remodulin.

Watson Laboratories, Inc.

In June 2015, we received a Paragraph IV certification notice letter from Watson Laboratories, Inc. (Watson) indicating that Watson has submitted an ANDA to the FDA to market a generic version of Tyvaso. In its notice letter, Watson states that it intends to market a generic version of Tyvaso before the expiration of U.S. Patent Nos. 6,521,212 and 6,756,033, each of which expires in November 2018; and U.S. Patent No. 8,497,393, which expires in December 2028. Watson’s notice letter states that the ANDA contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the proposed product described in Watson’s ANDA submission. We responded to the Watson notice letter by filing a lawsuit on July 22, 2015 against Watson in the U.S. District Court for the District of New Jersey alleging infringement of U.S. Patent Nos. 6,521,212, 6,756,033, and 8,497,393. Under the Hatch-Waxman Act, the FDA is automatically precluded from approving Watson’s ANDA for up to 30 months from receipt of Watson’s notice letter or until the issuance of a U.S. District Court decision that is adverse to us, whichever occurs first. On September 1, 2015, Watson filed (1) a motion to dismiss some, but not all, counts of the complaint, and (2) its answer to the complaint as well as certain counterclaims against us. On September 25, 2015, we filed our answer to Watson’s counterclaims. The Court has not held a scheduling conference and no trial date has been set.

We intend to vigorously enforce our intellectual property rights relating to Tyvaso.

SteadyMed Ltd.

On October 1, 2015, SteadyMed Ltd. (SteadyMed) filed a petition with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office for inter partes review (the IPR Petition) of U.S. Patent No. 8,497,393 (the ‘393 Patent), which is owned by United Therapeutics. In its IPR Petition, SteadyMed seeks to invalidate ‘393 Patent, which expires in December 2028 and covers a method of making treprostinil, which is the active pharmaceutical ingredient in our Remodulin, Tyvaso and Orenitram products. The ‘393 Patent was also the subject of the recently-settled Sandoz litigation, and remains the subject of our pending litigation with Teva and Watson, described above. We are currently reviewing the IPR Petition and intend to vigorously defend the ‘393 Patent. SteadyMed has announced that it is developing a product called Trevyent TM , which is a single-use, pre-filled pump it plans to seek FDA approval for delivery of a two-day supply of treprostinil subcutaneously using its PatchPump ® technology.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014, and the consolidated financial statements and accompanying notes included in Part I, Item I of this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including the statements listed in the section below entitled Part II, Item 1A—Risk Factors . These statements are based on our beliefs and expectations about future outcomes, and are subject to risks and uncertainties that could cause our actual results to differ materially from anticipated results. Factors that could cause or contribute to such differences include those described in Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q; factors described in our Annual Report on Form 10-K for the year ended December 31, 2014, under the section entitled Part I, Item 1A—Risk Factors—Forward-Looking Statements ; and factors described in other cautionary statements, cautionary language and risk factors set forth in other filings with the Securities and Exchange Commission (SEC). We undertake no obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

Our key therapeutic products and product candidates include:

· Prostacyclin analogues (Remodulin ® , Tyvaso ® , Orenitram ® and esuberaprost, formally called 314d) : stable synthetic forms of prostacyclin, an important molecule produced by the body that has powerful effects on blood vessel health and function;

· Phosphodiesterase type 5 (PDE-5) inhibitor (Adcirca ® ) : a molecule that acts to inhibit the degradation of cyclic guanosine monophosphate (cyclic GMP) in cells. Cyclic GMP is activated by nitric oxide (NO), a naturally occurring substance in the body that mediates the relaxation of vascular smooth muscle;

· Monoclonal antibody for oncologic applications (Unituxin TM , formerly called ch14.18) : an antibody that binds to cancerous tumors and destroys the cancer cells by a mechanism called antibody-dependent cell mediated toxicity;

· Glycobiology antiviral agents : a novel class of small, sugar-like molecules that have shown antiviral activity in a range of preclinical settings;

· Cell-based therapy : a cell-based product known as PLacental eXpanded (PLX) cells we are developing for the treatment of pulmonary hypertension; and

· Lung transplantation : engineered lungs and lung tissue, which we are developing using xenotransplantation and regenerative medicine technologies, for transplantation in patients suffering from pulmonary arterial hypertension (PAH) and other lung diseases. Through our wholly-owned subsidiary, Lung Biotechnology PBC, we are also developing technologies aimed at improving outcomes for lung transplant recipients and increasing the supply of donor lungs through ex-vivo lung perfusion.

We concentrate substantially all of our research and development efforts on the preceding key therapeutic programs.

We currently market and sell the following commercial products:

· Remodulin (treprostinil) Injection (Remodulin). Remodulin, a continuously-infused formulation of the prostacyclin analogue treprostinil, is approved by the United States Food and Drug Administration (FDA) for subcutaneous (under the skin) and intravenous (in the vein) administration. Remodulin is indicated to diminish symptoms associated with exercise in World Health Organization (WHO) Group 1 PAH patients. Remodulin has also been approved in various countries outside of the United States.

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· Tyvaso (treprostinil) Inhalation Solution (Tyvaso). Tyvaso, an inhaled formulation of treprostinil, is approved by the FDA to improve exercise ability in WHO Group 1 PAH patients.

· Orenitram (treprostinil) Extended-Release Tablets (Orenitram). In December 2013, the FDA approved Orenitram, a tablet dosage form of treprostinil, for the treatment of PAH in WHO Group 1 PAH patients to improve exercise capacity. We commenced sales of Orenitram during the second quarter of 2014.

· Adcirca (tadalafil) Tablets (Adcirca). We acquired exclusive commercialization rights to Adcirca, an oral PAH therapy, in the United States and Puerto Rico from Eli Lilly and Company (Lilly). Adcirca is approved by the FDA to improve exercise ability in WHO Group 1 PAH patients.

· Unituxin (dinutuximab) Injection (Unituxin). In March 2015, the FDA approved Unituxin in combination with granulocyte-macrophage colony-stimulating factor (GM-CSF), interleukin-2 (IL-2), and 13-cis-retinoic acid (RA), for the treatment of pediatric patients with high-risk neuroblastoma who achieve at least a partial response to prior first-line multiagent, multimodality therapy. We commenced U.S. sales of Unituxin in the third quarter of 2015. We received European Medicines Agency (EMA) approval during the third quarter of 2015.

Revenues

Our net product revenues consist entirely of net sales of our five commercial products: Remodulin, Tyvaso, Adcirca, Orenitram and Unituxin.

We have entered into separate, non-exclusive distribution agreements with Accredo Health Group, Inc. (Accredo) and CVS Caremark (Caremark) to distribute Remodulin, Tyvaso and Orenitram in the United States. We also sell Remodulin and Tyvaso to distributors internationally. Under our distribution agreements, we sell each of our treprostinil-based products to these distributors at a transfer price that we establish. We pay Accredo and Caremark fees for services provided in connection with the distribution and support of these products. We have generally increased the price of Tyvaso annually by 4.9 percent, and the last price increase became effective January 1, 2015. The price of Remodulin has not been increased since 2010.

We sell Adcirca through Lilly’s pharmaceutical wholesaler network at a price determined by Lilly, which Lilly generally increases two or three times per year. Most recently, Lilly increased the price of Adcirca by 9.9 percent effective May 14, 2015.

In the second quarter of 2015, we entered into an exclusive distribution agreement with ASD Specialty Healthcare, Inc., an affiliate of AmerisourceBergen Corporation (Amerisource), to distribute Unituxin in the United States. Under this Agreement, we sell Unituxin to Amerisource at a transfer price that we establish, and we pay Amerisource fees for services provided in connection with the distribution and support of Unituxin.

We recognize revenues for the sale of Remodulin, Tyvaso, Orenitram, Adcirca and Unituxin net of estimated rebates, prompt pay discounts, allowances for sales exchanges and returns, and distributor fees.

Generic Competition

We disclose in Part II, Item 1. —Legal Proceedings of this Quarterly Report on Form 10-Q (and in Note 14 - Litigation , to our consolidated financial statements included with this Quarterly Report on Form 10-Q), that we recently settled litigation with Sandoz Inc. (Sandoz) relating to Sandoz’s abbreviated new drug application (ANDA) seeking FDA approval to market a generic version of Remodulin before the expiration of certain of our U.S. patents in October 2017, September 2028, December 2028, and March 2029. Under the terms of this settlement, Sandoz will be permitted to market its generic version of Remodulin in the United States beginning in June 2018, although Sandoz may be permitted to enter the market earlier under certain circumstances. We also disclose that we are engaged in litigation with Teva Pharmaceuticals USA, Inc. (Teva) relating to a similar ANDA to market a generic version of Remodulin, as well as litigation against Watson Laboratories, Inc. (Watson), contesting its ANDA to market a generic version of Tyvaso before the expiration of certain of our U.S. patents in November 2018 and December 2028. Finally, we also disclose that SteadyMed Ltd. (SteadyMed) has recently filed a petition for inter partes review seeking to invalidate one of our patents that expires in December 2028 and covers a method of making treprostinil, which is the active ingredient in Remodulin, Tyvaso and Orenitram. SteadyMed has announced that it is developing a product called Trevyent TM , which is a single-use, pre-filled pump it plans to seek FDA approval to deliver a two-day supply of treprostinil subcutaneously using its PatchPump ® technology.

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As a result of our settlement with Sandoz, we expect to see generic competition for Remodulin in June 2018, and that this increased competition could reduce our sales. In addition, while we intend to vigorously enforce our intellectual property rights relating to Tyvaso and Orenitram, there can be no assurance that we will prevail in defending our patent rights, or that additional challenges from other ANDA filers or other challengers will not surface with respect to these products. Our patents could be invalidated, found unenforceable or found not to cover one or more generic forms of Remodulin, Tyvaso or Orenitram. If any ANDA filer were to receive approval to sell a generic version of Remodulin, Tyvaso or Orenitram and/or prevail in any patent litigation, the affected product(s) would become subject to increased competition which could reduce our sales.

Certain patents for Revatio ® , a PDE-5 inhibitor marketed by Pfizer, Inc. for treatment of PAH, expired in 2012, leading several manufacturers to launch generic formulations of sildenafil citrate, the active ingredient in Revatio. Generic sildenafil’s lower price relative to Adcirca could lead to pressure from payers to use generic products within the same class of therapy initially, which could lead to an erosion of Adcirca’s market share and limit its potential sales. Although we believe Adcirca’s once-daily dosing regimen provides a significant competitive advantage over generic sildenafil’s multiple dosing regimen, we believe that government payers and private insurance companies may favor the use of less expensive generic sildenafil over Adcirca. Thus far, we have not observed any measurable impact of generic sildenafil on sales of Adcirca; however, circumstances could change over time and our revenues could be adversely impacted. The U.S. patent for Adcirca for the treatment of pulmonary hypertension will expire in November 2017.

Patent expiration and generic competition for any of our commercial PAH products could have a significant, adverse impact on the magnitude of our revenues, which is inherently difficult to predict. For additional discussion, refer to the risk factor entitled, Our intellectual property rights may not effectively deter competitors from developing competing products that, if successful, could have a material adverse effect on our revenues and profits , contained in Part II , Item 1A—Risk Factors included in this Quarterly Report on Form 10-Q.

Operating Expenses

Our operating expenses include the following costs:

Research and Development

Our research and development expenses primarily include costs associated with the research and development of products and post-marketing research commitments. These costs generally include share-based compensation and salary-related expenses for research and development functions, professional fees for preclinical and clinical studies, costs associated with clinical manufacturing, facilities-related expenses and regulatory costs. Expenses also include costs for third-party arrangements, including upfront fees and milestones paid in connection with license arrangements for therapies under development.

Selling, General and Administrative

Our selling, general and administrative expenses primarily include costs associated with the commercialization of approved products and general and administrative costs to support our operations. Selling expenses generally include share-based compensation, salary-related expenses, product marketing and sales operations costs, and other costs incurred to support our sales efforts. General and administrative expenses include our core corporate support functions such as human resources, finance and legal, as well as external costs such as insurance premiums, legal fees and other professional service fees.

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Cost of Product Sales

Our cost of product sales primarily include costs to manufacture and acquire products sold. These costs generally include share-based compensation and salary-related expenses for manufacturing personnel, commercial distribution and support functions, direct materials and supplies, depreciation, building and overhead expenses and royalty payments under licensing agreements. Expenses also include the cost to warehouse, transfer and distribute products to customers.

We began selling Orenitram during 2014. Typical of the initial commercial activities of a newly-launched product, Orenitram’s cost of product sales as a percentage of its net revenue is significantly higher than that of our other commercial products. We expect that as Orenitram’s revenues increase, its cost of product sales as a percentage of net revenue will decrease to levels similar to our other treprostinil-based commercial products.

Share-Based Compensation

As discussed above, our operating expenses, and thus net income, are often materially impacted by the recognition of share-based compensation expense (benefit) associated with awards granted under our share tracking award plans (STAP), as the fair value of these awards varies with the changes in our stock price. The fair values of STAP awards and potential stock option grants are measured using inputs and assumptions under the Black-Scholes-Merton model that can materially impact the amount of compensation expense (benefit) for a given period. We account for STAP awards as liabilities because they are settled in cash. As such, we must re-measure the fair value of outstanding STAP awards at the end of each financial reporting period until the awards are no longer outstanding. Changes in our STAP-related liability resulting from such re-measurements are recorded as adjustments to share-based compensation expense (benefit) and can create substantial volatility within our operating expenses from financial reporting period to period.

In June 2015, our shareholders approved the United Therapeutics Corporation 2015 Stock Incentive Plan (the 2015 Plan). With the approval of the 2015 Plan, which authorizes the grant of up to 6,150,000 shares of our common stock, we have ceased granting STAP awards and have modified our equity compensation programs to grant stock options going forward to employees and non-employee directors who previously received STAP awards. No further awards will be granted under the 1999 Plan.

Through December 31, 2014, we were contractually obligated to award stock options each year to our Chairman and Co-Chief Executive Officer, Dr. Rothblatt, based on a formula tied to the growth (if any) in our market capitalization. These awards were granted at year-end under our Amended and Restated Equity Incentive Plan (the 1999 Plan), and vested immediately upon grant. We accrued compensation expense for Dr. Rothblatt’s estimated stock option grant when we determined that it was probable that the performance criteria would be met. Beginning in 2015, Dr. Rothblatt’s long term incentive compensation will be similar to other employees in that she will be eligible for an annual grant of performance-based stock options based on the achievement of our annual corporate milestones, which will vest over a four-year period from the grant date. Accordingly, there will be no share-based compensation expense recorded in calendar year 2015 for Dr. Rothblatt as the annual grant of performance-based stock options will be granted in calendar year 2016, if earned, based upon 2015 performance.

Major Research and Development Projects

Our major research and development projects focus on: (1) the use of prostacyclin analogues and other therapies, as well as lung transplantation technologies, to treat cardiopulmonary diseases; (2) monoclonal antibodies to treat cancer; and (3) glycobiology antiviral agents to treat infectious diseases.

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Cardiopulmonary Disease Projects

Remodulin Implantable System

In 2009, we entered into an agreement with Medtronic, Inc. (Medtronic) providing us exclusive rights in the United States, the United Kingdom, Canada, France, Germany, Italy and Japan to develop Medtronic’s proprietary intravascular infusion catheter to be used with its SynchroMed ® II implantable infusion pump and related infusion system components (together referred to as the Remodulin Implantable System) in order to deliver Remodulin for the treatment of PAH. If the Remodulin Implantable System is successful, it could reduce many of the patient burdens and other complications associated with the use of external pumps to administer prostacyclin analogues. With our funding, Medtronic completed the DelIVery clinical trial, in order to study the safety of the Remodulin Implantable System while administering Remodulin. The primary objective was to demonstrate a rate of catheter-related complications below 2.5 per 1,000 patient-days while using the Remodulin Implantable System to deliver Remodulin. In September 2013, Medtronic informed us that this primary objective was met (p<0.0001). In December 2014, Medtronic completed other stability, compatibility and technical assessments of the Remodulin Implantable System, including modifications to its hardware and software, and submitted a premarket approval application (PMA) seeking FDA approval for the catheter and labeling changes. Medtronic received notification that the PMA was accepted for review in January 2015. Medtronic is responsible for responding to any FDA requests for additional information concerning the use of the Remodulin Implantable System with Remodulin.

In January 2015, we submitted a supplemental New Drug Application (NDA) with new labeling requesting FDA approval to allow the use of Remodulin with the Remodulin Implantable System. The FDA has indicated that our submission will be treated as a new NDA and asked us to resubmit the supplement as a new NDA.

In March 2015, the FDA requested that Medtronic amend its PMA for the Remodulin Implantable System to reflect an amendment to the SynchroMed II PMA separately submitted by Medtronic’s neuromodulation business unit, and issued a refuse-to-file letter with respect to our NDA for the Remodulin Implantable System. FDA has asked Medtronic to amend its PMA to include additional information. Once Medtronic’s amended PMA has been submitted and accepted by FDA, and our resubmission has been submitted and accepted, we anticipate a ten-month review process by FDA.

In April 2015, the FDA filed a consent decree requiring Medtronic to stop manufacturing, designing and distributing SynchroMed II implantable infusion pump systems, except in limited circumstances, citing violations of the quality system regulation for medical devices. The consent decree will remain in effect until the FDA has determined that Medtronic has met all the provisions listed in the consent decree. We are currently assessing the impact of this consent decree on our program to develop the Remodulin Implantable System.

Subcutaneous Remodulin Administered via Pre-Filled, Semi-Disposable Pump

In December 2014, we entered into an exclusive agreement with DEKA Research & Development Corp. (DEKA) to develop a pre-filled, semi-disposable pump system for subcutaneous delivery of Remodulin. Under the terms of the agreement, we will fund the development costs related to the semi-disposable pump system and will pay product fees and a single-digit royalty to DEKA based on commercial sales of the system and the Remodulin sold for use with the system. Our goal is to be in a position to receive FDA approval for this delivery system by the end of 2018.

Tyvaso

We are developing further enhancements intended to make the Tyvaso Inhalation System easier to use. In addition, we are studying Tyvaso in combination with esuberaprost, as discussed below, and planning further studies of Tyvaso.

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Orenitram

In December 2013, the FDA approved Orenitram for the treatment of PAH in WHO Group 1 patients to improve exercise capacity. The primary study that supported efficacy of Orenitram was a 12-week monotherapy study (FREEDOM-M) in which PAH patients were not on any approved background therapy.

We believe that in order for Orenitram to reach its full commercial potential, we need to complete further studies to support an amendment to Orenitram’s label to indicate that Orenitram delays morbidity and mortality (also known as “time to clinical worsening”) in patients who are on an approved oral background therapy. As such, we are enrolling up to 610 patients in a phase IV clinical trial called FREEDOM-EV, which began in 2012. FREEDOM-EV is a placebo-controlled study of patients who enter the study on an approved background therapy, and one of the two primary endpoints of the study is the time to clinical worsening.

We expect to seek approval of Orenitram in Europe upon completion of the FREEDOM-EV study. In 2005, the EMA announced that Orenitram had been designated an orphan medicinal product for the treatment of PAH. A request for orphan drug designation for Orenitram is pending before the FDA. We are also planning further studies of Orenitram.

Esuberaprost (formally called 314d)

We have been studying various formulations of beraprost since 2000, under a license agreement with Toray Industries, Inc. (Toray). In July 2012, we completed a phase I safety trial of esuberaprost, a reformulated, single-isomer version of beraprost, and the data suggested that dosing esuberaprost four times a day was safe. We believe that esuberaprost and treprostinil have differing prostacyclin receptor-binding profiles and thus could provide benefits to certain groups of patients with differing sets of safety and efficacy profiles. We also believe that inhaled treprostinil and esuberaprost have complimentary pharmacokinetic and pharmacodynamic profiles, which indicate that they should provide greater efficacy in combination. As a result, in 2013 we began enrolling a phase III study called BEAT ( BE raprost 314d A dd-on to T yvaso) to evaluate the clinical benefit and safety of esuberaprost in combination with Tyvaso for patients with PAH who show signs of deterioration on inhaled treprostinil or have a less than optimal response to inhaled treprostinil treatment. We intend to enroll 240 patients in the study, which will have a primary endpoint of time to clinical worsening. If we are not successful in securing FDA approval of esuberaprost in combination with Tyvaso following the BEAT study, we expect to terminate our license agreement with Toray.

Cell-Based Therapy

In 2011, we entered into a license agreement with Pluristem Ltd. (Pluristem) to develop and commercialize a cell-based product for the treatment of PAH using Pluristem’s proprietary cell technology known as PLacental eXpanded (PLX) cells. We commenced a phase I clinical study in Australia in 2013.

Lung Transplantation

The only reported cure for PAH is a lung transplant. We believe that fewer than 100 PAH patients receive a lung transplant each year due to the shortage of available lungs for transplant and the demand for transplantable lungs in patients with other end-stage pulmonary diseases, such as chronic obstructive pulmonary disease and idiopathic pulmonary fibrosis.

In 2011, we acquired all of the outstanding stock of Revivicor, Inc., a company focused on developing genetic biotechnology platforms to provide alternative tissue sources for the treatment of human degenerative disease through tissue and organ xenotransplantation. We are focused on this platform with the goal of providing transplantable lungs for human patients.

In May 2014 and September 2015, we completed separate $50.0 million investments in the preferred stock of Synthetic Genomics Inc. (SGI), for a total investment, as of September 30, 2015, of $100.0 million. In addition, we entered into a separate multi-year research and development collaboration agreement with SGI in May 2014, whereby SGI will develop engineered primary pig cells with modified genomes for use in our xenotransplantation program. This collaboration was initially focused primarily on lungs and was expanded in September 2015 to include an additional focus on kidneys. Under this agreement, each party assumes its own research and development costs and SGI may receive royalties and milestone payments from development and commercialization of organs.

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We are also engaged in preclinical development of several regenerative technologies for creating transplantable lung tissue and whole lungs for patients with end-stage lung disease, as well as other technologies intended to improve outcomes for lung transplant recipients. We have commenced a phase II clinical trial in the United States to study the use of ex-vivo lung perfusion technology originally developed in Canada (where it is already used commercially) to provide extended preservation and assessment of donated lungs that are initially rejected for transplantation.

In 2014, we completed the construction of the only laboratory facility in the United States devoted to performing ex-vivo lung perfusion on a fee-for-service basis. In June 2015, we entered into a collaboration agreement with the Mayo Clinic in Jacksonville, Florida (Mayo) to build and operate a second such facility. We are responsible for nearly all costs associated with the construction of the facility on Mayo’s campus, as well as the ongoing operating expenses for the facility. Construction of the facility is expected to be completed in late 2017. Under our collaboration agreement, we may also establish similar facilities at Mayo Clinic’s campuses in Arizona and Minnesota.

Cancer-Related Projects

Unituxin (formerly called ch14.18)

In March 2015, the FDA approved our Biologics License Application (BLA) for Unituxin, in combination with granulocyte-macrophage colony-stimulating factor (GM-CSF), interleukin-2 (IL-2), and 13-cis-retinoic acid (RA), for the treatment of pediatric patients with high-risk neuroblastoma who achieve at least a partial response to prior first-line multiagent, multimodality therapy. We commenced sales of Unituxin in the third quarter of 2015. We received European Commission approval during the third quarter of 2015, and plan to commence commercial sales in individual European countries following pricing and reimbursement approvals on a country-by-country basis.

We previously received orphan drug designation for Unituxin from both the FDA and the EMA. Orphan designation, coupled with FDA approval of our BLA, confers an exclusivity period through March 2022, during which the FDA may not approve any application to market the same drug for the same indication, except in limited circumstances. In lieu of a royalty payment to the NCI, we have an ongoing obligation to provide the NCI with Unituxin for its studies free of charge.

Under our BLA approval for Unituxin, the FDA has imposed certain post-marketing requirements and post-marketing commitments on us. We are conducting additional clinical and non-clinical studies to satisfy these requirements and commitments.

Infectious Disease Projects

Pursuant to our research agreement with the University of Oxford (Oxford), we have the exclusive right to commercialize a platform of glycobiology antiviral drug candidates in various preclinical stages of testing for the treatment of a wide variety of viruses. Through our research agreement with Oxford, we are also supporting the research of new glycobiology antiviral drug candidates and technologies. We are currently testing many of these compounds in preclinical studies and we continue to synthesize new agents that we may elect to test.

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In 2011, we were awarded a cost plus fixed fee contract under a Broad Agency Announcement from the National Institute of Allergy and Infectious Diseases (NIAID) of the NIH for studies directed toward the development of a broad spectrum antiviral drug with a primary indication for dengue and a secondary indication for influenza, based on our glycobiology antiviral platform. The award consists of a base award and eight milestone-based options to expand the project and funding under the contract. To date, we have received contract modifications exercising five of these options, increasing total committed contract funding to $28.1 million. The aggregate value of the contract assuming the exercise of all eight options is $45.6 million. We recognize revenue under this contract to the extent of allowable costs incurred, plus a proportionate amount of fees earned. Related revenues are included under the caption Other Revenues on our consolidated statements of operations.

We began enrolling a phase I clinical trial of our lead antiviral candidate, an alpha-glucosidase inhibitor called UV-4B, for the treatment of dengue in the third quarter of 2014. In November 2014, the FDA granted orphan drug designation for UV-4B for the treatment of acute dengue illness. We are also performing preclinical studies of UV-4B for the treatment of patients with influenza.

Future Prospects

The extent of our future success is dependent on, among other things, how well we achieve the following objectives: (1) in the near term, continued sales growth of our current commercial products (including, in particular, Orenitram) by increasing our market share and launching enhancements designed to improve patient care, such as new delivery systems for Remodulin; (2) in the medium term, augmenting our near-term product growth through: (a) the successful launch of Orenitram for use in combination with other oral therapies following positive FREEDOM-EV results, and (b) the launch of esuberaprost in combination with Tyvaso following positive results of the BEAT study; and (3) in the long term, supplementing our oral, inhaled and infused PAH therapy revenues by introducing transplantable cells, tissues and organs that may prove effective in treating PAH and other end-stage diseases.

Our ability to achieve these objectives and sustain our growth and profitability will depend on many factors, including among others: (1) the timing and outcome of clinical trials and regulatory approvals for products we develop; (2) the timing of and the degree of success related to the commercial launch of new products; (3) the demand for our products; (4) the price of our products and the reimbursement of our products by public and private health insurance organizations; (5) the competition we face within our industry; (6) our ability to effectively manage our business in an increasingly complex legal and regulatory environment; (7) our ability to defend against generic competition and challenges to our patents, including the ongoing challenges to our Remodulin, Tyvaso and Orenitram patents and the expected launch of Sandoz’s generic version of Remodulin in the United States in 2018; and (8) the risks identified in Part II, Item 1A—Risk Factors , included in this Quarterly Report on Form 10-Q.

We will need to construct additional facilities to support the development and commercialization of our products and services. We are currently planning construction of a facility in Jacksonville, Florida, which will serve as a lung restoration center performing ex-vivo lung perfusion services. We are also in the final planning stages for a building in Silver Spring, Maryland, to house additional laboratory and office space adjacent to our existing co-headquarters. In addition, the development and commercialization of broad-spectrum anti-viral drugs, cell therapies and transplantable lungs and lung tissues will require the design and construction of sophisticated facilities that will need to comply with stringent regulatory requirements related to these programs, some of which have not yet been developed or adopted by the relevant government agencies. The extent to which we fully develop any of these facilities will depend on the progress of our pre-clinical and clinical development in various earlier stage programs.

We operate in a highly competitive market in which a small number of pharmaceutical companies control a majority share of available PAH therapies. These pharmaceutical companies are well established in the market and possess greater financial, technical and marketing resources than we do. In addition, there are a number of investigational products in late-stage development that, if approved, may erode the market share of our existing commercial therapies and make market acceptance more difficult to achieve for any therapies we attempt to market in the future.

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Financial Position

Cash, cash equivalents and marketable securities at September 30, 2015 and December 31, 2014 (excluding restricted amounts of $5.4 million) were $1,008.1 million and $812.8 million, respectively. The increase of $195.3 million in unrestricted cash, cash equivalents and marketable securities resulted primarily from the $357.2 million of cash generated from operating activities. Additionally, there was a cash inflow from investing activities of $350.0 million related to the sale of our PPRV that we received from the FDA in connection with our BLA for Unituxin. These increases were partially offset by the use of $394.5 million to repurchase shares of our common stock and the use of $107.1 million to settle early conversions of our Convertible Notes.

Convertible Notes decreased by $96.4 million, from $126.4 million at December 31, 2014, to $30.0 million at September 30, 2015, as a result of the early conversions of $107.1 million of our Convertible Notes during the nine months ended September 30, 2015, net of amortization of $10.7 million for the unamortized discount of which $7.9 million was related to the early conversions of our Convertible Notes. Refer to Note 8 —Debt—Convertible Notes Due 2016 to our consolidated financial statements.

The STAP liability decreased by $54.2 million, from $322.7 million at December 31, 2014, to $268.5 million at September 30, 2015. The decrease of the liability resulted from cash paid to settle STAP awards exercised during the nine-month period ending September 30, 2015 of $218.2 million, partially offset by the vesting of STAP awards.

Additional paid-in capital was $1,723.9 million at September 30, 2015, compared to $1,376.1 million at December 31, 2014. The $347.7 million increase in additional paid-in capital primarily consisted of $64.4 million in proceeds from stock option exercises and related tax benefits and $273.2 million related to the common stock issued in connection with the early conversion of $107.1 million of our Convertible Notes based on the value of the closing price of our common stock on the date the shares were issued.

The $665.1 million increase in treasury stock from $1,185.8 million at December 31, 2014 to $1,850.9 million at September 30, 2015, was driven by our repurchase of approximately 2.4 million shares of our common stock at a cost of $394.5 million during the nine months ended September 30, 2015 and $270.6 million reflecting the value of the receipt of approximately 1.6 million shares from our note hedge in connection with the early conversion of $107.1 million of our Convertible Notes based on the closing price of our common stock on the date the shares were received during the nine months ended September 30, 2015. Refer to Note 10— Stockholders’ Equity—Share Repurchases and Note 8 —Debt—Convertible Notes Due 2016 to our consolidated financial statements.

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Three Months Ended September 30, 2015 and September 30, 2014

Revenues

The following table sets forth the components of net revenues (dollars in thousands):

	Three Months Ended September 30,				Percentage
	2015		2014		Change
Net product revenues:
Remodulin	$	150,075	$	142,877	5.0	%
Tyvaso	121,718		119,685		1.7	%
Adcirca	73,797		51,247		44.0	%
Orenitram	34,389		14,460		137.8	%
Unituxin	4,729		—		N/A
Other	1,513		1,681		(10.0	)%
Total net revenues	$	386,221	$	329,950	17.1	%

Revenues for the three months ended September 30, 2015 increased by $56.3 million, compared to the three months ended September 30, 2014. The growth in revenues primarily resulted from: (1) a $22.6 million increase in Adcirca revenues, driven by price increases, which are determined by Lilly, and by an increase in the number of Adcirca bottles sold; and (2) a $19.9 million increase in Orenitram revenues due to an increase in the number of patients being treated. In addition, $4.7 million of the increase in revenue during the three months ended September 30, 2015 was due to our first commercial sales of Unituxin. For the three months ended September 30, 2015 and September 30, 2014, approximately 72 percent and 75 percent, respectively, of total net revenues were derived from our U.S.-based specialty pharmaceutical distributors.

The tables below include a reconciliation of the accounts associated with estimated rebates, prompt-pay discounts, sales allowances and distributor fees (in thousands):

	Three Months Ended September 30, 2015
	Rebates			Prompt Pay Discounts			Allowance for Sales Returns			Distributor Fees			Total
Balance, July 1, 2015	$	40,953		$	3,600		$	4,674		$	1,418		$	50,645
Provisions attributed to sales in:
Current period	40,032			8,673			715			3,052			52,472
Prior periods	968			—			—			35			1,003
Payments or credits attributed to sales in:
Current period	(7,166		)	(5,219		)	—			(985		)	(13,370		)
Prior periods	(34,889		)	(3,477		)	(578		)	(1,453		)	(40,397		)
Balance, September 30, 2015	$	39,898		$	3,577		$	4,811		$	2,067		$	50,353

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	Three Months Ended September 30, 2014
	Rebates			Prompt Pay Discounts			Allowance for Sales Returns			Distributor Fees			Total
Balance, July 1, 2014	$	26,316		$	3,018		$	3,366		$	739		$	33,439
Provisions attributed to sales in:
Current period	32,197			7,331			430			2,224			42,182
Prior periods	902			—			—			(388		)	514
Payments or credits attributed to sales in:
Current period	(1,122		)	(4,567		)	—			(426		)	(6,115		)
Prior periods	(30,946		)	(3,011		)	(234		)	(1,495		)	(35,686		)
Balance, September 30, 2014	$	27,347		$	2,771		$	3,562		$	654		$	34,334

Research and Development Expense

The table below summarizes research and development expense by major project and non-project component (dollars in thousands):

	Three Months Ended September 30,					Percentage
	2015			2014		Change
Project and non-project component:
Cardiopulmonary	$	34,020		$	28,423	19.7	%
Share-based compensation (benefit) expense	(31,042		)	82,513		(137.6	)%
Other	6,549			7,940		(17.5	)%
Total research and development expense	$	9,527		$	118,876	(92.0	)%

Share-based compensation. The decrease in share-based compensation of $113.6 million for the three months ended September 30, 2015, compared to the same three-month period in 2014, was primarily due to a 25 percent decrease in our stock price during the quarter ended September 30, 2015, compared to a 45 percent increase during the same quarter in 2014.

Selling, General and Administrative Expense

The table below summarizes selling, general and administrative expense by major category (dollars in thousands):

	Three Months Ended September 30,					Percentage
	2015			2014		Change
Category:
General and administrative	$	41,016		$	53,781	(23.7	)%
Sales and marketing	21,488			19,719		9.0	%
Share-based compensation (benefit) expense	(79,780		)	129,007		(161.8	)%
Total selling, general and administrative expense	$	(17,276	)	$	202,507	(108.5	)%

General and administrative. The decrease in general and administrative expense of $12.8 million for the three months ended September 30, 2015, compared to the same three-month period in 2014, resulted primarily from a $13.0 million decrease in grants to non-profit organizations that provide financial assistance to patients with PAH.

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Share-based compensation. The decrease in share-based compensation of $208.8 million for the three months ended September 30, 2015, compared to the same three-month period in 2014, was primarily due to a 25 percent decrease in our stock price during the quarter ended September 30, 2015, as compared to a 45 percent increase during the same quarter in 2014.

Cost of Product Sales

The table below summarizes cost of product sales by major category (dollars in thousands):

	Three Months Ended September 30,					Percentage
	2015			2014		Change
Category:
Cost of product sales	$	14,997		$	31,996	(53.1	)%
Share-based compensation (benefit) expense	(8,106		)	8,807		(192.0	)%
Total cost of product sales	$	6,891		$	40,803	(83.1	)%

Cost of product sales. The decrease in cost of product sales for the three months ended September 30, 2015, compared to the three months ended September 30, 2014, was due to the expiration of our royalty obligation to GlaxoSmithKline plc in October 2014. During the three months ended September 30, 2014, we incurred $24.9 million in royalty expense related to this royalty obligation.

Share-based compensation. The decrease in share-based compensation of $16.9 million for the three months ended September 30, 2015, compared to the same three-month period in 2014, was primarily due to a 25 percent decrease in our stock price during the quarter ended September 30, 2015, as compared to a 45 percent increase during the same quarter in 2014.

Gain on Sale of Intangible Asset

In September 2015, we sold the PPRV we received from the FDA in connection with the approval of our BLA for Unituxin. In exchange for the voucher we received $350.0 million from AbbVie Ireland Unlimited Company (Abbvie). The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset, as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.

Income Tax Expense

The provision for income tax expense is based on an estimated annual effective tax rate that is subject to adjustment in subsequent quarterly periods if components used to estimate the annual effective tax rate are updated or revised. Our estimated annual effective tax rates were approximately 38 percent and approximately 36 percent as of September 30, 2015 and September 30, 2014, respectively. Our 2015 estimated annual effective tax rate increased as of September 30, 2015, primarily due to a decrease in the estimated general business credits as compared to the prior year.

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Nine Months Ended September 30, 2015 and 2014

Revenues

The following table sets forth the components of net revenues (dollars in thousands):

	Nine Months Ended September 30,				Percentage
	2015		2014		Change
Net product revenues:
Remodulin	$	432,313	$	417,137	3.6	%
Tyvaso	350,939		347,997		0.8	%
Adcirca	187,248		147,926		26.6	%
Orenitram	81,145		21,092		284.7	%
Unituxin	4,729		—		N/A
Other	4,512		8,004		(43.6	)%
Total net revenues	$	1,060,886	$	942,156	12.6	%

Revenues for the nine months ended September 30, 2015 increased by $118.7 million, compared to the same period in 2014. The growth in revenues primarily resulted from: (1) a $60.0 million increase in Orenitram revenues due to an increase in the number of patients being treated; and (2) a $39.3 million increase in Adcirca revenues driven primarily by price increases, which are determined by Lilly, and to a lesser extent by an increase in the number of Adcirca bottles sold. In addition, $4.7 million of the increase in revenue was due to our first commercial sales of Unituxin, which we launched during the nine months ended September 30, 2015. For the nine-month periods ended September 30, 2015 and 2014, approximately 74 percent and 75 percent, respectively, of total net revenues were derived from our U.S.-based specialty pharmaceutical distributors.

The tables below include a reconciliation of the accounts associated with estimated rebates, prompt-pay discounts, sales allowances and distributor fees (in thousands):

	Nine Months Ended September 30, 2015
	Rebates			Prompt Pay Discounts			Allowance for Sales Returns			Distributor Fees			Total
Balance, January 1, 2015	$	31,616		$	3,285		$	4,028		$	557		$	39,486
Provisions attributed to sales in:
Current period	123,293			24,295			1,786			6,745			156,119
Prior periods	828			—			339			(256		)	911
Payments or credits attributed to sales in:
Current period	(82,608		)	(20,758		)	—			(4,693		)	(108,059		)
Prior periods	(33,231		)	(3,245		)	(1,342		)	(286		)	(38,104		)
Balance, September 30, 2015	$	39,898		$	3,577		$	4,811		$	2,067		$	50,353

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	Nine Months Ended September 30, 2014
	Rebates			Prompt Pay Discounts			Allowance for Sales Returns			Distributor Fees			Total
Balance, January 1, 2014	$	22,475		$	2,500		$	2,862		$	1,092		$	28,929
Provisions attributed to sales in:
Current period	84,503			19,390			1,197			5,438			110,528
Prior periods	6,716			—			220			278			7,214
Payments or credits attributed to sales in:
Current period	(57,697		)	(16,806		)	—			(4,626		)	(79,129		)
Prior periods	(28,650		)	(2,313		)	(717		)	(1,528		)	(33,208		)
Balance, September 30, 2014	$	27,347		$	2,771		$	3,562		$	654		$	34,334

Research and Development Expense

The table below summarizes research and development expense by major project and non-project component (dollars in thousands):

	Nine Months Ended September 30,				Percentage
	2015		2014		Change
Project and non-project component:
Cardiopulmonary	$	91,800	$	84,986	8.0	%
Share-based compensation expense	57,377		56,985		0.7	%
Other	19,973		29,096		(31.4	)%
Total research and development expense	$	169,150	$	171,067	(1.1	)%

Other. The decrease in other research and development expenses of $9.1 million for the nine months ended September 30, 2015 compared to the same nine-month period in 2014, was primarily attributable to a $6.3 million decrease in expenditures for our development of Unituxin.

Selling, General and Administrative Expense

The table below summarizes selling, general and administrative expense by major category (dollars in thousands):

	Nine Months Ended September 30,				Percentage
	2015		2014		Change
Category:
General and administrative	$	131,769	$	144,819	(9.0	)%
Sales and marketing	69,599		60,688		14.7	%
Share-based compensation expense	102,683		95,246		7.8	%
Total selling, general and administrative expense	$	304,051	$	300,753	1.1	%

General and administrative. The decrease in general and administrative expense of $13.0 million for the nine months ended September 30, 2015, compared to the same nine-month period in 2014, resulted primarily from an $11.7 million decrease in grants to non-affiliated, non-profit organizations that provide financial assistance to patients with PAH.

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Sales and marketing. The increase in sales and marketing expense of $8.9 million for the nine months ended September 30, 2015, compared to the same nine-month period in 2014, was driven by increases in marketing activities, salaries and other compensation related expenses as we expanded our sales personnel. The expansion of sales activities was primarily the result of marketing expenses after the launch of Orenitram in the second quarter of 2014 and preparation for the commercial launch of Unituxin in the third quarter of 2015.

Cost of Product Sales

The table below summarizes cost of product sales by major category (dollars in thousands):

	Nine Months Ended September 30,				Percentage
	2015		2014		Change
Category:
Cost of product sales	$	40,901	$	104,614	(60.9	)%
Share-based compensation expense	2,826		5,499		(48.6	)%
Total cost of product sales	$	43,727	$	110,113	(60.3	)%

Cost of product sales. The decrease in cost of product sales for the nine months ended September 30, 2015, compared to the same period in 2014, was due to the expiration of our royalty obligation to GlaxoSmithKline plc in October 2014. During the nine months ended September 30, 2014, we incurred $71.1 million in royalty expense related to this royalty obligation.

Gain on Sale of Intangible Asset

In September 2015, we sold the PPRV we received from the FDA in connection with the approval of our BLA for Unituxin. In exchange for the voucher we received $350.0 million from AbbVie. The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset, as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.

Income Tax Expense

Liquidity and Capital Resources

We have funded our operations principally through sales of our commercial products and, from time-to-time, third-party financing arrangements. We believe that our current liquidity is sufficient to fund ongoing operations and future business plans as we expect demand for our commercial products to continue to grow. Furthermore, our customer base remains stable and we believe it presents minimal credit risk. However, any projections of future cash flows are inherently subject to uncertainty and we may seek other forms of financing.

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Cash Flows

Operating Activities

Our operating assets and liabilities consist primarily of accounts receivable, inventories, accounts payable and accrued expenses, which include share-based compensation arrangements. During the periods presented in the accompanying financial statements, the combination of revenue growth and profitable operations has resulted in positive cash flows provided by operations.

Net cash provided by operating activities was $357.2 million for the nine months ended September 30, 2015, compared to $264.7 million for the nine months ended September 30, 2014. The $92.6 million increase in cash flows from operations was primarily due to the following year-over-year changes:

(1) Increase in cash provided by operating activities:

· $118.7 million increase in revenues during the nine-month period ended September 30, 2015 compared to the same period in 2014, which resulted in higher cash collections;

· $60.8 million decrease in cash paid for income taxes. Cash paid for income taxes during the nine-month periods ended September 30, 2015 and September 30, 2014 was $116.9 million and $177.7 million, respectively. This decrease in cash paid for income taxes was due to an over-payment of prior year federal and state tax payments that we plan to apply against our current year tax liabilities; and

· The aggregation of individually immaterial changes to operating assets and liabilities.

(2) Decrease in cash provided by operating activities:

· $120.3 million increase in cash paid to settle STAP awards. Cash paid to settle STAP awards exercised during the nine-month periods ended September 30, 2015 and September 30, 2014 was $218.2 million and $97.9 million, respectively.

Investing Activities

Net cash provided by investing activities was $447.2 million for the nine months ended September 30, 2015, compared to $286.5 million for the nine months ended September 30, 2014. The $160.7 million increase reflects $350.0 million of cash from the sale of our PPRV in September 2015, offset by a decrease of cash provided from the net maturities of held-to-maturity investments of $207.1 million. Cash provided from the net maturities of held-to-maturity investments during the nine months ended September 30, 2015 was $169.6 million, compared to $376.7 million of cash provided from the net maturities of held-to-maturity investments during the same period in 2014. Due to the funding requirements for our share repurchase program and settlements of early conversions of our Convertible Notes, we have decreased the amount of cash we are reinvesting in held-to-maturity investments.

Financing Activities

Net cash used in financing activities was $433.2 million for the nine months ended September 30, 2015, compared to $337.3 million for the nine months ended September 30, 2014. The $96.0 million increase reflects $107.1 million in principal payments related to the early conversion of our Convertible Notes during the nine months ended September 30, 2015, whereas there were no early conversions during the nine months ended September 30, 2014. The effects of the principal payments of the Convertible Notes were partially offset by an $8.7 million decrease in share repurchases during the nine months ended September 30, 2015 compared to the same period in 2014.

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Convertible Senior Notes

In October 2011, we issued the Convertible Notes with an aggregate principal value of $250.0 million. Please see Note 8 —Debt , to our consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q, for a description of the Convertible Notes. As of September 30, 2015, the outstanding principal balance of our Convertible Notes was $31.6 million.

Between October 30, 2015 and November 11, 2015, we expect to settle conversion requests representing $26.0 million in principal value of Convertible Notes. In addition, we expect to issue shares of our common stock to the converting note holders, and to receive an equivalent number of shares under our note hedge with Deutsche Bank AG London at the settlement dates, which will be placed into our treasury stock account.

Line of Credit

In September 2013, we entered into a one-year Credit Agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo) providing us a $75.0 million revolving loan facility, which may be increased by up to an additional $75.0 million provided certain conditions are met. In July 2015, we amended the Credit Agreement solely to extend its maturity to September 30, 2017. We use this facility for general corporate purposes. At our option, amounts borrowed under the Credit Agreement bear interest at either the one-month LIBOR rate plus a 0.50 percent margin, or a fluctuating base rate excluding any margin. In addition, we are subject to a monthly commitment fee at a rate of 0.06 percent per annum based on the average daily unused balance of the facility. Amounts borrowed under the Credit Agreement are secured by certain of our marketable investments. As of September 30, 2015, we had no outstanding balance on the line of credit.

Share Tracking Awards Plans

Awards granted under our STAP entitle participants to receive in cash an amount equal to the appreciation in our common stock, which is calculated as the increase in the closing price of our common stock between the grant date and the exercise date. Cash requirements associated with the exercise of awards will likely be significant, with the actual requirements dependent on future stock price fluctuation and STAP award exercise activity. At September 30, 2015, the aggregate liability associated with vested STAP awards was $268.5 million. We review the potential future cash requirements of the STAP program at least annually. Based on our review, we believe we currently have sufficient cash and cash equivalents and borrowing capacity to fund any STAP awards that could be exercised during 2015 and beyond. Following the adoption of the 2015 Plan, which is discussed above under Operating Expenses—Share-Based Compensation , we discontinued the issuance of STAP awards and modified our compensation programs to provide for future awards in the form of stock options instead of STAP awards.

Share Repurchases

From time to time, our Board of Directors may authorize plans to repurchase our common stock. In June 2014, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock. This program became effective on August 1, 2014, and remained open for one year. During the quarter ended September 30, 2015 we acquired approximately 337,000 shares of our common stock at an aggregate cost of $57.6 million under this repurchase program. In the aggregate, we repurchased approximately 3.3 million shares of common stock under this program for $500.0 million.

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Summary of Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (GAAP) requires our management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We continually evaluate our estimates and judgments to determine whether they are reasonable, relevant and appropriate. These assumptions are frequently developed from historical data or experience, currently available information and anticipated developments. By their nature, our estimates are subject to an inherent degree of uncertainty; consequently, actual results may differ. We discuss critical accounting policies and estimates that involve a higher degree of judgment and complexity in Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no material changes to our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Recently Issued Accounting Standards

See Note 2 —Basis of Presentation , to our consolidated financial statements for information on our anticipated adoption of recently issued accounting standards.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2015, we have invested $248.3 million in debt securities issued by corporations and federally-sponsored agencies. The market value of these investments varies inversely with changes in current market interest rates. In general, as interest rates increase, the market value of these debt securities would be expected to decrease. Conversely, as interest rates decrease, the market value of these debt securities would be expected to increase. To address market risk, we invest in debt securities that mature within three years and hold these investments to maturity so that they can be redeemed at their stated or face value. At September 30, 2015, our investments had a weighted average stated interest rate of approximately 0.66 percent and a weighted average maturity of approximately 1.0 year. Many of our investments are callable prior to maturity.

During sustained periods of instability and uncertainty in the financial markets, we could be exposed to additional investment-related risks that could materially affect the value and liquidity of our investments. In light of these risks, we actively monitor market conditions and developments specific to the securities and security classes we invest in. We believe that we maintain a conservative investment approach in that we invest exclusively in highly rated securities with relatively short maturities. While we believe we take prudent measures to mitigate investment related risks, such risks cannot be fully eliminated, as circumstances may arise that are beyond our control.

Item 4. CONTROLS AND PROCEDURES

Based on their evaluation, as of September 30, 2015, our Chairman and Co-Chief Executive Officer, President and Co-Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, summarized, processed and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chairman and Co-Chief Executive Officer, President and Co-Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Please refer to Note 14 —Litigation , to our consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. RISK FACTORS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 (the Exchange Act) and the Private Securities Litigation Reform Act of 1995, which statements are based on our beliefs and expectations as to future outcomes. These statements include, among others, statements relating to the following:

· Expectations of revenues, expenses, profitability, and cash flows, including our expectation that Orenitram ® (treprostinil) Extended Release Tablets (Orenitram) cost of product sales as a percentage of its net revenue will become comparable to our other treprostinil-based commercial products;

· The sufficiency of current and future working capital to support operations;

· Our ability to obtain financing;

· Our expectation that we will pay the full principal balance due on the converting Convertible Notes upon settlement and that we have sufficient resources available to pay all amounts due;

· The value of our common stock and our ability and plans to complete our newly-authorized $500 million common stock repurchase program expected to commence on January 1, 2016;

· The maintenance of domestic and international regulatory approvals;

· Our ability to maintain attractive pricing for our products, in light of increasing competition and pressure from government and other payers to decrease the costs associated with healthcare;

· The expected volume and timing of sales of our existing commercial products — Remodulin ® (treprostinil) Injection (Remodulin), Tyvaso ® (treprostinil) Inhalation Solution (Tyvaso), Orenitram, Adcirca ® (tadalafil) Tablets (Adcirca) and Unituxin TM (dinutuximab) Injection (Unituxin) — and potential future commercial products such as esuberaprost and our antiviral drug candidates;

· The timing and outcome of clinical studies, other research and development efforts, and related regulatory filings, including: (1) our plans to complete our FREEDOM-EV study of Orenitram; (2) our aim to obtain United States Food and Drug Administration (FDA) approval for Orenitram as a combination therapy; (3) our plan to file for approval of Orenitram in Europe upon the successful completion of the FREEDOM-EV study; (4) our phase III clinical trial of esuberaprost in combination with Tyvaso, and our expectation that we will terminate our license agreement with Toray if we are not successful in securing FDA approval of esuberaprost following this study; and (5) our collaboration with DEKA Research & Development Corp. (DEKA) to develop a pre-filled, semi-disposable pump system for subcutaneous Remodulin;

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· The expected likelihood and timing of regulatory submissions and approvals for drug candidates under development and the timing of related sales, including pending regulatory filings by Medtronic, Inc. (Medtronic) and us with respect to the Remodulin Implantable System, as well as the consent decree relating to Medtronic’s implantable pump;

· The outcome of potential future regulatory actions, including audits and inspections, by the FDA and international regulatory agencies;

· The impact of competing therapies, including generic products (such as generic sildenafil) and newly-developed therapies, on sales of our commercial products;

· The expectation that we will be able to produce sufficient quantities and maintain adequate inventories of our commercial products, through both our in-house production capabilities and third-party production sites, and our ability to obtain and maintain related approvals by the FDA and other regulatory agencies;

· The adequacy of our intellectual property protections and the validity and expiration dates of the patents we own or license;

· Our expectations regarding our ability to defend our intellectual property relating to Remodulin, Tyvaso and Orenitram against generic and other challenges, including but not limited to our ongoing litigation with Teva Pharmaceuticals USA, Inc. (Teva) related to Remodulin, our ongoing litigation with Watson Laboratories, Inc. (Watson) related to Tyvaso, and the petition by SteadyMed Ltd. (SteadyMed) seeking to invalidate one of our patents covering treprostinil, which is the active ingredient in Remodulin, Tyvaso and Orenitram;

· Our expectation that Sandoz will launch a generic version of Remodulin in the United States beginning in June 2018 (or earlier under certain circumstances), in accordance with the terms of our settlement agreement with Sandoz;Any statements that include the words “believe,” “seek,” “expect,” “anticipate,” “forecast,” “project,” “intend,” “estimate,” “should,” “could,” “may,” “will,” “plan,” or similar expressions; and

· Other statements contained or incorporated by reference in this Quarterly Report on Form 10-Q that are not historical facts.

Forward-looking statements appear in the section entitled Part I, Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report on Form 10-Q. These statements are subject to risks and uncertainties, and our actual results may differ materially from anticipated results. Factors that may cause such differences include, but are not limited to, those discussed below. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

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Risks Related to Our Business

We rely heavily on sales of Remodulin, Tyvaso, Orenitram and Adcirca to generate revenues and support our operations.

Sales of our current PAH therapies (Remodulin, Tyvaso, Orenitram and Adcirca) comprise substantially all of our revenues. A wide variety of events, many of which are described in other risk factors below, could cause sales of these products to decline, or to grow more slowly than expected. For instance, we would be unable to sell any of these products if their regulatory approvals were withdrawn. Any substantial change in the prescribing practices or dosing patterns of patients using Remodulin, Tyvaso, Orenitram or Adcirca due to combination or competing therapies, side effects, adverse events, deaths or any other reasons could decrease related revenues. We also face potential generic competition. For example, during the fourth quarter of 2012, generic sildenafil became commercially available, which could negatively affect future demand for Adcirca. We also recently settled our patent litigation with Sandoz relating to Remodulin, and have agreed that Sandoz will be permitted to launch its generic version of Remodulin in the United States in June 2018, although Sandoz may be permitted to launch earlier under certain circumstances. We are also defending our intellectual property related to Remodulin and Tyvaso against generic challenges by other generic companies, and another company has recently filed a petition challenging one of our patents relating to Remodulin, Tyvaso and Orenitram. In addition, we rely on third parties to produce, market, distribute and sell all of our commercial products. The inability of any one of these third parties to perform these functions satisfactorily could result in a reduction in sales. In addition, any failure to effectively manage our internal production processes could result in an inability to meet patient demand. Because we are highly dependent on sales of Remodulin, Tyvaso and Adcirca, as well as on future growth in sales of Orenitram, a reduction in sales of any one of these products could have a material adverse impact on our operations.

If our products fail in clinical trials, we will be unable to obtain or maintain FDA and international regulatory approvals and will be unable to sell those products.

To obtain regulatory approvals from the FDA and international regulatory agencies such as the European Medicines Agency (EMA), we must conduct clinical trials demonstrating that our products are safe and effective. In the past, several of our product candidates failed or were discontinued at various stages in the development process. Moreover, we may need to amend ongoing trials or the FDA and/or international regulatory agencies may require us to perform additional trials beyond those we planned. Such occurrences could result in significant delays and additional costs, and related clinical trials may be unsuccessful. Approval of a New Drug Application (NDA) or Biologics License Application (BLA) could be subject to delays if the FDA determines that it cannot review or approve the application as submitted. In such a case, the FDA would issue a refuse-to-file letter or a complete response letter outlining deficiencies in the submission, and the FDA may require substantial additional studies, testing or information in order to complete its review of the application. We may fail to address any of these deficiencies adequately and consequently would be unable to obtain FDA approval to market the product candidate.

In addition, we are enrolling a phase IV clinical trial called FREEDOM-EV, which is a study of Orenitram in combination with other approved pulmonary arterial hypertension (PAH) therapies. One primary endpoint of the study is time to clinical worsening. The primary endpoint of our phase III study of esuberaprost in combination with Tyvaso is also time to clinical worsening. We have not previously conducted a study with time to clinical worsening as its primary endpoint. Our inexperience with this type of trial design may impact our ability to conduct these trials appropriately and achieve positive results, or complete the trials within our anticipated timetable. In particular, failure to prove the efficacy of Orenitram in combination with other PAH therapies could materially limit the commercial potential of Orenitram and impede our growth.

The length of time that it takes for us to complete clinical trials and obtain regulatory approval for marketing varies by product, product use and country. Furthermore, we cannot predict with certainty the length of time it will take to complete necessary clinical trials or obtain regulatory approval of our future products.

Our clinical trials may be discontinued, delayed or disqualified for various reasons. These reasons include:

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· The drug is ineffective, or physicians and/or patients believe that the drug is ineffective;

· We fail to reach agreement with the FDA or non-U.S. regulatory agencies regarding the scope or design of our clinical trials;

· Patients do not enroll in our studies at the rate we expect;

· We are unable to obtain approval from institutional review boards to conduct clinical trials at their respective sites;

· Ongoing or new clinical trials conducted by drug companies in addition to our own clinical trials reduce the availability of patients for our trials;

· Other investigational or approved therapies are viewed as more effective or convenient by physicians or patients;

· Our clinical trial sites, contracted clinical trial administrators or clinical studies conducted entirely by third parties do not adhere to trial protocols and required quality controls under FDA good clinical practice (GCP) regulations and similar regulations outside the United States;

· Patients experience severe side effects during treatment or die during our trials because of adverse events related to the trial drug, advanced disease, or other medical complications; and

· The results of our clinical trials conducted in countries outside of the United States are not acceptable to the United States or other countries, and the results of our clinical trials conducted in the United States are not acceptable to regulators in other countries.

In addition, the FDA and its international counterparts have substantial discretion over the approval process for pharmaceutical products. As such, these regulatory agencies may not agree that we have demonstrated the requisite level of product safety and efficacy to grant approval.

We may not compete successfully with established and newly developed drugs or products, or the companies that develop and market them.

We compete with well-established drug companies for, among other things, funding, licenses, expertise, personnel, clinical trial patients and investigators, consultants and third-party collaborators. We also compete with these companies for market share. Most of these competitors have substantially greater financial, marketing, manufacturing, sales, distribution and technical resources, and a larger number of approved products, than we do. These competitors also possess greater experience in areas critical to success such as research and development, clinical trials, sales and marketing and regulatory matters. There are several treatments that compete with our commercial therapies, as well as several other therapies under development, such as Actelion’s Uptravi ® (selexipag) drug candidate, which is an oral prostacyclin IP receptor agonist intended to treat PAH. Actelion has announced that it submitted an NDA with the FDA in December 2014, and is expecting a 12-month review, and that it submitted an Marketing Authorisation Application to the European Medicines Agency in December 2014. For the treatment of PAH, we compete with a number of approved products in the United States and worldwide, including the following: Adempas ® , Flolan ® , Ilomedin ® , Letairis ® , Opsumit ® , Revatio ® , Tracleer ® , Veletri ® , Volibris ® , Ventavis ® , generic epoprostenol and generic sildenafil citrate. Patients and doctors may perceive these competing products, or products developed in the future, as safer, more effective, more convenient and/or less expensive than our therapies. Alternatively, doctors may reduce the prescribed doses of our products if they prescribe them in combination with our competitors’ products. In addition, many competing PAH therapies are less invasive than Remodulin and the use of these products may delay or prevent initiation of Remodulin therapy. Any of these circumstances could negatively impact our operating results.

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Development of new products or technologies by others may make our products obsolete or seemingly inferior.

Other companies may introduce new products that may render all or some of our technologies and products obsolete or noncompetitive. For example, both Adempas and Opsumit were recently approved by the FDA for the treatment of PAH. Our commercial therapies may also have to compete with investigational products currently in development, including Uptravi, which was submitted by Actelion in December 2014 to the FDA and EMA for approval to treat PAH, and Trevyent TM , which is a single-use, pre-filled pump being developed by SteadyMed to deliver a two-day supply of treprostinil subcutaneously using its PatchPump ® technology. In addition, alternative approaches to treating chronic diseases, such as gene therapy or cell therapy, may make our products obsolete or noncompetitive. If introduced into the market, investigational therapies for PAH could be used in combination with, or as a substitute for, our therapies. If this occurs, doctors may reduce or discontinue the use of our products for their patients.

Sales of our products are subject to reimbursement from government agencies and other third parties. Pharmaceutical pricing and reimbursement pressures may negatively impact our sales.

The commercial success of our products depends, in part, on the availability of reimbursements by governmental payers such as Medicare and Medicaid, and private insurance companies. An estimated 35-50% of Remodulin, Tyvaso, Adcirca and Orenitram sales in the United States are reimbursed under the Medicare and Medicaid programs. In the United States, the European Union and other potentially significant markets for our products such as China and Japan, government payers and/or third-party payers are increasingly attempting to limit or regulate the price of medicinal products and frequently challenge the pricing of new and expensive drugs. Our prostacyclin analogue products (Remodulin, Tyvaso and Orenitram) are expensive therapies. Consequently, it may be difficult for our distributors to obtain adequate reimbursement for our products from third-party payers to motivate such distributors to support our products. Alternatively, third-party payers may reduce the amount of reimbursement for our products based on changes in pricing of other therapies for PAH. If third-party payers do not approve our products for reimbursement, or limit reimbursements, patients and physicians could choose competing products that are approved for reimbursement or provide lower out-of-pocket costs.

In the United States, the federal government and others are increasingly focused on analyzing the impact of various regulatory programs on the federal deficit, which could result in increased pressure on federal programs to reduce costs. In addition, financial pressures may cause the federal government or other third-party payers to seek cost containment more aggressively through mandatory discounts or rebates on our products, policies requiring the automatic substitution of generic products, more rigorous requirements for initial reimbursement approvals for new products or other similar measures. For example, there have been proposals to reduce reimbursement rates and/or adopt mandatory rebates under Medicare Part B, which covers Remodulin and Tyvaso. A reduction in the availability or extent of reimbursement from government health care programs could have a material adverse effect on our business and results of our operations.

In Europe, the success of our commercial products and future products depends largely on obtaining and maintaining government reimbursement at acceptable levels. In many European countries, patients are unlikely to use prescription drugs that are not reimbursed by their governments. Countries in Europe are under increasing pressure to reduce the cost of health care. Changes to current reimbursement policies may adversely affect our ability to sell our products or sell our products on a profitable basis. In many markets outside the United States, governments control the prices of prescription pharmaceuticals through the implementation of reference pricing, price cuts, rebates, revenue-related taxes and profit control. Furthermore, international governments expect prices of prescription pharmaceuticals to decline over the life of the product or as prescription volumes increase. In addition, in December 2011, we received marketing approval for the intravenous use of Remodulin in most of the countries that are members of the European Economic Area (EEA); however, we are in the process of obtaining approval of our risk management plan on a country-by-country basis, and must obtain pricing approval in each of these member countries before we can market Remodulin. Delays in obtaining these approvals, or failure to obtain satisfactory pricing approvals, could impact our future sales growth. Additionally, in granting pricing approval for the intravenous use of Remodulin, a member country may approve a lower reimbursement price for intravenous Remodulin than for subcutaneous Remodulin, or reduce the reimbursement price for both methods of administering Remodulin. Any regulatory action reducing the reimbursement rates for intravenous and subcutaneous Remodulin could have a material adverse effect on our revenues, results of operations and our business.

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Our production strategy exposes us to significant risks.

We must be able to produce sufficient quantities of our commercial products to satisfy the growing demand for our products. We produce Remodulin, Orenitram, Tyvaso and Unituxin, including the active ingredient in each of these products, at our own facilities and rely on third parties for additional production capacity. We rely on Minnetronix, Inc. as the sole manufacturer of the Tyvaso Inhalation System, and on Eli Lilly and Company (Lilly) as the sole manufacturer of Adcirca. In addition, if the Remodulin Implantable System is approved, we will be reliant on Medtronic as the sole manufacturer of the Synchromed II infusion system.

We substantially rely on third parties to adhere to and maintain production processes in accordance with all applicable regulatory requirements. If any of these critical third-party production and supply arrangements are interrupted for compliance issues or other reasons, we may not have sufficient inventory to meet future demand. In addition, any change in suppliers and/or service providers could interrupt the production of our commercial products and impede the progress of our commercial launch plans and clinical trials.

In addition, our internal production process also subjects us to risks as we engage in increasingly complex production processes. For example, Remodulin, Tyvaso and Unituxin must be formulated in a sterile environment, which is challenging to maintain on a commercial scale. In addition, Unituxin is a monoclonal antibody. As with all biologic products, monoclonal antibodies are inherently more difficult to produce than our treprostinil-based products and involve increased risk of viral and other contaminants. Finally, we have limited experience producing Orenitram and Unituxin on a commercial scale, and currently all Orenitram and Unituxin production is performed internally. It could take substantial time to establish an FDA-approved contract manufacturer as a back-up supplier of our newest products, Orenitram and Unituxin, or this process may not be successful at all.

Additional risks we face with our production strategy include the following:

· We and our third-party producers are subject to the FDA’s current Good Manufacturing Practices and similar international regulatory standards. We are limited in our ability to exercise control over regulatory compliance by our third-party producers;

· As we expand our production operations to include new elements of the production process or new products, we may experience difficulty designing and implementing processes and procedures to ensure compliance with applicable regulations;

· Even if we and our third-party producers are in compliance with applicable domestic and international drug production regulations, the sterility and quality of the products being produced could be substandard and, therefore, such products would be unavailable for sale or use or subject to recalls;

· If we had to replace our own production operations or a third-party producer, the FDA and its international counterparts would require new testing and compliance inspections. Furthermore, a new producer would have to be familiarized with the processes necessary to produce and commercially validate our products, as producing our treprostinil-based and biologic products is complex;

· We may be unable to contract with needed producers on satisfactory terms or at all; and

· The supply of materials and components necessary to produce and package our products may become scarce or unavailable. Disruptions to the supply of these materials could delay the production and subsequent sale of such products. Any products produced with substituted materials or components would be subject to approval from the FDA and international regulatory agencies before they could be sold. The timing of any such regulatory approval is difficult to predict.

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Any of these factors could disrupt sales of our commercial products, delay clinical trials or commercialization of new products, result in product liability claims and product recalls, and entail higher costs. Interruptions in our production process could be significant given the length of time and complexity involved in obtaining necessary regulatory approvals for alternative arrangements, through either third parties or internal manufacturing processes.

We rely in part on third parties to perform activities that are critical to our business. Our ability to generate commercial sales or conduct clinical trials could suffer if our third-party suppliers and service providers fail to perform.

Third parties assist us in: (1) producing our commercial products; (2) conducting clinical trials, preclinical studies and other research and development activities; (3) obtaining regulatory approvals; (4) conducting pharmacovigilance-related and product complaint activities, including drug safety, reporting adverse events and product complaints; and (5) marketing and distributing our products. In addition, we rely on independent third party manufacturers for the availability of pumps and ancillary supplies necessary for the delivery of subcutaneous and intravenous Remodulin, and in most cases we have no contracts with these manufacturers. The involvement of third parties is necessary because we do not possess the internal capacity, and in certain cases the expertise, to perform all of these functions. Accordingly, the success of these third parties in performing their contractual obligations is critical to our operations.

For risks relating to the involvement of third parties in our production process, see the risk factor above, entitled Our production strategy exposes us to significant risks.

We rely on Accredo Health Group, Inc. (Accredo) and CVS Health Corporation (CVS) to distribute and sell Remodulin, Tyvaso and Orenitram in the United States. These distributors are also partially responsible for negotiating reimbursements from third-party payers for the cost of our therapies. We also rely on ASD Specialty Healthcare, Inc. to distribute and sell Unituxin in the United States. From time-to-time, we increase the price of products sold to our U.S.-based and international distributors. Our price increases may not be fully reimbursed by third-party payers. If our distributors do not achieve acceptable profit margins on our products, they may reduce or discontinue the sale of our products. Furthermore, if our distributors devote fewer resources to sell our products or are unsuccessful in their sales efforts, our revenues may decline materially. Outside the U.S., we are substantially reliant on our international distributors to maintain regulatory approvals for our products and to market and sell our products in compliance with applicable laws and regulations.

We rely on Lilly to manufacture and supply Adcirca for us, and we use Lilly’s pharmaceutical wholesaler network to distribute Adcirca in the United States and Puerto Rico. If Lilly is unable to manufacture or supply Adcirca or its distribution network is disrupted, it could delay, disrupt or prevent us from selling Adcirca, which would slow the growth of our business. In addition, Lilly has the right to determine the price of Adcirca, which generally moves in parity with the price Lilly sets for Cialis ® (both of these products contain the same active ingredient). Changes in Lilly’s prices could adversely impact demand or reimbursement for Adcirca, particularly in light of the commercial availability of generic sildenafil, the active ingredient in Revatio, which could be prescribed in lieu of Adcirca.

In addition, any change in service providers could interrupt the distribution of our commercial products and our other products and services, and impede the progress of our clinical trials, commercial launch plans and related revenues.

We rely heavily on third-party contract research organizations, contract laboratories, clinical investigative sites and other third-parties to conduct our clinical trials, preclinical studies and other research and development activities. In addition, the success of certain products we are developing will depend on clinical trials sponsored by third parties. Failure by any third party to conduct or assist us in conducting clinical trials in accordance with study protocols, quality controls and GCP, or other applicable U.S. or international requirements or to submit associated regulatory filings, could limit or prevent our ability to rely on results of those trials in seeking regulatory approvals.

We rely heavily on Medtronic for the success of our program to develop an implantable pump to deliver intravenous Remodulin (the Remodulin Implantable System). Medtronic has completed a clinical study in this regard, and submitted a Premarket Approval Application (PMA) seeking FDA approval for the Remodulin Implantable System. We rely on Medtronic to respond to FDA requests for additional information with respect to its PMA, and following approval we will rely on Medtronic to manufacture the Remodulin Implantable System and to maintain appropriate quality controls relating to the system. We also note that Medtronic has received a consent decree requiring the company to stop manufacturing, designing and distributing SynchroMed II implantable infusion pump systems, except in limited circumstances, citing violations of the quality system regulation for medical devices. The consent decree will remain in effect until the FDA has determined that Medtronic has met all the provisions listed in the consent decree. We are currently assessing the impact of this consent decree on our program to develop the Remodulin Implantable System. As such, we can provide no assurances as to the timing or likelihood of the Remodulin implantable pump program’s success. Similarly, we rely heavily on DEKA for the development of a pre-filled, semi-disposable pump system for subcutaneous Remodulin.

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We are reliant on third parties to supply pumps and other supplies necessary to deliver Remodulin. There are a limited number of pumps available in the market, and the discontinuation of any particular pump could have a material, adverse impact on our Remodulin revenues. For example, Smiths Medical recently announced that it has discontinued the manufacture of the CADD ® MS-3 pump, which is the only pump currently used in the United States for delivery of subcutaneous Remodulin. While we are developing a semi-disposable pump system for subcutaneous Remodulin with DEKA, this pump may not successfully be developed on a timely basis, or at all. If an alternate pump is not launched in the United States before inventories of the CADD MS-3 pump are discontinued, patients in the U.S. will be unable to initiate subcutaneous Remodulin therapy or continue subcutaneous Remodulin therapy in the event their current pumps need replacement, and our revenues would be adversely impacted.

Our operations must comply with extensive laws and regulations in the United States and other countries, including FDA regulations. Failure to obtain approvals on a timely basis or to achieve continued compliance could delay, disrupt or prevent the commercialization of our products.

The products we develop must be approved for marketing and sale by regulatory agencies and, once approved, are subject to extensive regulation. Our research and development efforts must comply with extensive regulations, including those promulgated by the FDA and the United States Department of Agriculture. The process of obtaining and maintaining regulatory approvals for new drugs is lengthy, expensive and uncertain. The regulatory approval process is particularly uncertain for our lung transplantation programs, which include the development of xenotransplantation, regenerative medicine and cell-based products. The manufacture, distribution, advertising and marketing of our products are also subject to extensive regulation, including strict pharmacovigilance and adverse event and medical device reporting requirements. Any future product approvals we receive could be accompanied by significant restrictions on the use or marketing of a given product. Furthermore, our product candidates may fail to receive marketing approval on a timely basis, or at all. If granted, product approvals can be withdrawn for failure to comply with regulatory requirements, such as post-marketing requirements and post-marketing commitments, or upon the occurrence of adverse events subsequent to commercial introduction.

Discovery of previously unknown problems with our marketed products or problems with our manufacturing, regulatory, compliance, research and development, pharmacovigilance and adverse event reporting, marketing or sales activities could result in regulatory restrictions on our products up to and including withdrawal of our products from the market. If we fail to comply with applicable regulatory requirements, we could be subject to penalties that may consist of fines, suspension of regulatory approvals, product recalls, seizure of our products and/or criminal prosecution. In addition, our reputation could be harmed as a result of any such regulatory restrictions or actions, and patients and physicians may avoid the use of our products even after we have resolved the issues that led to such regulatory action.

For example, in December 2013 we received a subpoena from the OIG in connection with a civil investigation by the United States Department of Justice, principally represented by the United States Attorney’s Office for the District of Maryland. The subpoena requested documents regarding Remodulin, Tyvaso and Adcirca, including our marketing practices relating to these products. We are not aware that a claim, litigation or assessment has been asserted in connection with the subpoena. However, such subpoenas are often associated with previously filed qui tam actions brought under the federal and state false claims acts. Qui tam actions are lawsuits brought by private plaintiffs on behalf of the federal government, and often state governments, for alleged federal or state false claims act violations, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim. Although the government has notified us that it has closed its investigation, we cannot predict whether a private plaintiff plans to take action in connection with this matter.

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We are subject to ongoing regulatory review of our currently marketed products.

After our products receive regulatory approval, they remain subject to ongoing regulatory requirements, which can impact, among other things, product labeling, manufacturing practices, pharmacovigilance and adverse event and medical device reporting, complaint processing, storage, distribution, advertising and promotion, and record keeping. If we do not comply with applicable regulations, the range of possible sanctions may include: (1) adverse publicity, (2) product recalls or seizures, (3) fines, (4) total or partial suspensions of production and/or distribution, (5) suspension of marketing applications, and (6) enforcement actions, including injunctions and civil suits or criminal prosecution. Further, the FDA often requires post-marketing testing and surveillance to monitor the effects of approved products. The FDA and comparable international regulatory agencies may condition approval of our product candidates on the completion of such post-marketing clinical studies. These post-marketing studies may suggest that a product causes undesirable side effects or may present a risk to the patient. If data we collect from post-marketing studies suggest that one of our approved products may present an unacceptable safety risk, regulatory authorities could withdraw the product’s approval, suspend production or place other marketing restrictions on that product. If regulatory sanctions are applied or if regulatory approval is delayed or withdrawn, our operating results and the value of our company may be adversely affected.

Regulatory approval for our currently marketed products is limited by the FDA and other regulators to those specific indications and conditions for which clinical safety and efficacy have been demonstrated.

Any regulatory approval of our products is limited to specific diseases and indications for which our products have been deemed safe and effective by the FDA. In addition to the FDA approval required for new formulations, any new indication for an approved product also requires FDA approval. If we are not able to obtain FDA approval for any desired future indications for our products, our ability to effectively market and sell our products may be reduced.

While physicians may choose to prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those approved by regulatory authorities (called “off-label” uses), our ability to promote the products is limited to those indications that are specifically approved by the FDA. Although U.S. regulatory authorities generally do not regulate the behavior of physicians, they do restrict communications by companies on the subject of off-label use. If our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, failure to follow FDA rules and guidelines relating to promotion and advertising can result in the FDA’s refusal to approve a product, suspension or withdrawal of an approved product from the market, product recalls, fines, disgorgement of money, operating restrictions, civil lawsuits, injunctions or criminal prosecution.

We must comply with various laws in jurisdictions around the world that restrict certain marketing practices in the pharmaceutical and medical device industries. Failure to comply with such laws could result in penalties and have a material adverse effect on our business, financial condition and results of operations.

There are various laws in jurisdictions around the world that restrict particular marketing practices in the pharmaceutical and medical device industries. These laws include, but are not limited to, anti-kickback and false claims statutes, the Foreign Corrupt Practices Act and the UK Bribery Act. Our business activities may be subject to challenge under these laws, and any penalties imposed upon us could have a material adverse effect on our business and financial condition. Furthermore, we have significantly expanded our sales and marketing staff. Any expansion of sales and marketing efforts can increase the risks of noncompliance with these laws. Finally, the growth in our operations outside the United States, both directly and through third-party distributors, also has increased these risks.

In the United States, the federal health care program anti-kickback statute prohibits, among other activities, knowingly and willfully offering, paying, soliciting, or receiving compensation to induce, or in return for, the purchase, lease, order or arranging the purchase, lease or order of any health care product or service reimbursable under any federally financed health-care program. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other. The exemptions and safe harbors for this statute are narrow, and practices that involve compensation intended to induce prescriptions, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices may not always meet all of the criteria for safe harbor protection.

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The federal False Claims Act prohibits any person from knowingly presenting or causing to be presented a false claim or knowingly making or causing a false statement material to a false claim. Several pharmaceutical and health care companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the free product. Other companies have been prosecuted for causing false claims to be submitted because of these companies’ marketing of a product for unapproved and non-reimbursable uses. Potential liability under the federal False Claims Act includes mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim. The majority of states also have statutes or regulations similar to the federal anti-kickback statute and False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs; furthermore, in several states, these statutes and regulations apply regardless of the payer. Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s product from reimbursement under government programs, debarment, criminal fines, and imprisonment.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (PPACA), also imposed new reporting requirements for pharmaceutical, biologic and device manufacturers with regard to payments or other transfers of value made to physicians and teaching hospitals. In addition, pharmaceutical, biologic and device manufacturers, with certain exceptions, are required to report and disclose investment interests held by physicians and their immediate family members during the preceding calendar year. Failure to submit required information may result in civil monetary penalties of up to $150,000 per year (and up to $1.0 million per year for “knowing failures”) for all payments, transfers of value or ownership or investment interests not reported in an annual submission.

Further, the PPACA amends the intent requirement of the federal anti-kickback and criminal health care fraud statutes. This amendment provides that a person or entity no longer needs to have knowledge of these statutes or specific intent to violate them. In addition, the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

If not preempted by this federal law, several states currently require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to individual physicians in those states. Depending on the state, legislation may prohibit various other marketing related activities, or require the posting of information relating to clinical studies and their outcomes. In addition, certain states, such as California, Nevada, Connecticut and Massachusetts, require pharmaceutical companies to implement compliance programs or marketing codes and several other states are considering similar proposals. Compliance with these laws is difficult and time consuming, and companies that do not comply with these state laws will face civil penalties.

Government health care reform could increase our costs, which would adversely affect our revenue and results of operations.

Our industry is highly regulated and changes in law may adversely impact our business, operations or financial results. The PPACA is a broad measure intended to expand health care coverage within the United States, primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program. The reforms imposed by the law will significantly impact the pharmaceutical industry; however, the full effects of the PPACA will be unknown until all of these provisions are implemented and the Centers for Medicare and Medicaid Services and other federal and state agencies issue applicable regulations or guidance. Moreover, in the coming years, additional changes could be made to governmental health care programs that could significantly impact the success of our products or product candidates.

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Reports of actual or perceived side effects and adverse events associated with our products, such as sepsis, could cause physicians and patients to avoid or discontinue use of our products in favor of alternative treatments.

Reports of side effects and adverse events associated with our products could have a significant adverse impact on the sale of our products. An example of a known risk associated with intravenous Remodulin is sepsis, which is a serious and potentially life-threatening infection of the bloodstream caused by a wide variety of bacteria. Intravenous prostacyclin analogues, such as intravenous Remodulin, are infused continuously through a catheter placed in a large vein in the patient’s chest, and sepsis is a known risk associated with this type of delivery. As a result, sepsis is included as a risk in the Remodulin package insert, and the occurrence of sepsis is familiar to physicians who prescribe intravenously administered therapies. Concerns about bloodstream infections may affect a physician’s decision to prescribe or a patient’s willingness to use intravenous Remodulin.

Negative attention from special interest groups may impair our business.

As is common with pharmaceutical and biotechnology companies, our early-stage research and development involves animal testing, which we conduct both directly and through contracts with third parties. Notwithstanding the vital role of animal research in the drug discovery and development process, certain special interest groups categorically object to the use of animals for research purposes. Historically, our research and development activities have not been the subject of significant animal rights media attention. However, research activities with animals have been the subject of adverse attention, generally including demonstrations near facilities operated by other companies in our industry. Any negative attention, threats or acts of vandalism directed against our animal research activities in the future could impede the operation of our business.

If any of the license or other agreements under which intellectual property rights are licensed to, or were acquired by us, are breached or terminated, our right to continue to develop, produce and sell the products covered by such agreements could be impaired or lost.

Our business depends upon our continuing ability to exploit our intellectual property rights in the drugs and other products that have been discovered and initially developed by others and those which we have commercialized and are developing further. These intellectual property rights have either been licensed to us or have been acquired by us. Under each of our product license agreements, we are granted a license to intellectual property owned by others that covers a drug or other product. Under each of our purchase agreements, we have rights to certain intellectual property. We may be required to license other intellectual property owned by third parties to continue to develop and commercialize our products.

This dependence on intellectual property developed by others involves the following risks:

· We may be unable to obtain rights to intellectual property that we determine we need for our business at a reasonable cost or at all;

· If any of our product licenses or purchase agreements are terminated, we may lose our rights to develop, make and sell the products to which such licenses or agreements relate;

· Our license and purchase agreements generally provide the licensor or seller with the right to terminate the agreement in the event of a breach; for example, if we fail to pay royalties and other fees timely and do not cure the failure within a stated time period; and

· If a licensor of intellectual property that we have rights to breaches its obligation or otherwise fails to maintain the intellectual property licensed, we may lose any ability to prevent others from developing or marketing similar products that are covered by such intellectual property. In addition, we may be forced to incur substantial costs to maintain the intellectual property ourselves or take legal action seeking to force the licensor to do so.

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Certain agreements under which we acquired or licensed intellectual property rights may restrict our ability to develop related products in certain countries or for particular diseases and may impose other restrictions that affect our ability to develop and market related products in the most effective manner.

When we acquire or license intellectual property rights to drugs and other products that have been discovered and initially developed by others, these rights are frequently limited. For instance, our rights to market Adcirca are geographically limited to the United States and Puerto Rico. Furthermore, we cannot undertake any additional investigational work with respect to Adcirca in other indications of pulmonary hypertension without Lilly’s prior approval. Provisions in our license and purchase agreements may impose other restrictions that affect our ability to develop and market products to which the intellectual property relates. For example, Lilly also has authority over all regulatory activities relating to Adcirca and has the right to determine the price at which we sell the drug.

Our intellectual property rights may not effectively deter competitors from developing competing products that, if successful, could have a material adverse effect on our revenues and profits.

The period under which our commercial and developmental therapies are protected by our patent rights is limited. Three of our U.S. patents covering our current methods of synthesizing and producing treprostinil, the active ingredient in Remodulin, Tyvaso and Orenitram, expire in October 2017, and a fourth will expire in 2028. We recently settled patent litigation with Sandoz, which will permit Sandoz to launch a generic version of Remodulin in the United States in June 2018, although Sandoz may be permitted to enter the market earlier under certain circumstances. We also have been granted one patent in the European Union and one patent in Japan, each of which covers our treprostinil synthesis and production methods and will expire in October 2018. Our three U.S. patents covering an improved diluent for Remodulin will expire in 2028 and 2029. Our patents for Tyvaso covering methods of treating PAH by inhaled delivery will expire in the United States and in various countries throughout the world in 2018 and 2020, respectively. Our patents for Orenitram covering methods of use for treating PAH, orally administered formulations, controlled moisture storage and production methods and controlled release formulations will expire in the United States between 2024 and 2031 and in various countries throughout the world in 2024. The U.S. patent for Adcirca for the treatment of pulmonary hypertension will expire in November 2017.

We continue to conduct research into new methods to synthesize treprostinil and have pending U.S. and international patent applications and patents relating to such methods. However, we cannot be sure that these additional patents will effectively deter or delay competitors’ efforts to bring new products to market, or that additional patent applications will result in new patents. Upon the expiration of any of our patents, competitors may develop generic versions of our products and may market those generic versions at a lower price to compete with our products. Competitors may also seek to design around our patents prior to their expiration in an effort to develop competing products that do not infringe our patents. Prior to the expiration of our patents, third parties may challenge the validity of our patents, through patent litigation, proceedings before the U.S. Patent and Trademark Office or other applicable patent filing office, or other means.

The scope of any patent we hold may not deter competitors from developing a product that competes with the product we sell that is covered by the patent. Patent laws of foreign jurisdictions may not protect our patent rights to the same extent as the patent laws of the United States. In addition, we may be forced to incur substantial costs to defend the intellectual property rights conferred by our patents. Furthermore, our suppliers who have granted us exclusive rights may have inadequate intellectual property protections. Competitors also may attempt to invalidate our existing patents before they expire.

In addition to patent protection, we also rely on trade secrets to protect our proprietary know-how and other technological advances that we do not disclose to the public. We enter into confidentiality agreements with our employees and others to whom we disclose trade secrets and other confidential information. These agreements may not necessarily prevent our trade secrets from being used or disclosed without our authorization and confidentiality agreements may be difficult, time-consuming and expensive to enforce or may not provide an adequate remedy in the event of unauthorized disclosure. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such third party, or those to whom they communicate such technology or information, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our business and competitive position could be harmed.

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The validity, enforceability and scope of certain of our patents covering Remodulin, Tyvaso and Orenitram are currently being challenged as a result of abbreviated new drug application (ANDA) filings by generic drug companies and a petition for inter partes review. The outcome of current or future challenges with respect to the validity, enforceability, or scope of our patents could significantly reduce revenues from Remodulin, Tyvaso and Orenitram.

Both Sandoz and Teva have filed ANDAs seeking FDA approval to market generic versions of Remodulin, and Watson has filed an ANDA seeking FDA approval to market a generic version of Tyvaso. We recently settled our litigation with Sandoz, which will permit Sandoz to launch its generic Remodulin product in the United States in June 2018, although Sandoz may be permitted to enter the market earlier under certain circumstances, and we have filed lawsuits against Teva and Watson in the U.S. District Court for the District of New Jersey alleging patent infringement. In addition, in October 2015 SteadyMed filed a petition for inter partes review with the Patent Trial and Appeal Board of the United States Patent and Trademark Office seeking to invalidate one of our patents covering a method of making treprostinil that expires in 2028 and is listed in the Orange Book for Remodulin, Tyvaso, and Orenitram. For details on the status of these proceedings, please see Part II, Item 1.—Legal Proceedings and Note 14 —Litigation , to our consolidated financial statements, contained elsewhere in this Quarterly Report on Form 10-Q.

There can be no assurance that we will prevail in our defense of our patent rights, or that additional challenges from other ANDA filers or other competitors will not surface with respect to Remodulin, Tyvaso or Orenitram. Our existing patents could be invalidated, found unenforceable or found not to cover one or more generic forms of Remodulin, Tyvaso or Orenitram. If any ANDA filer were to receive approval to sell a generic version of Remodulin, Tyvaso or Orenitram and/or prevail in any patent litigation, the affected product would become subject to increased competition and our revenue would decrease.

Third parties may allege that our patents are invalid, or that our products or services infringe their patents and other intellectual property rights, which could result in the payment of royalties. Payment of royalties would negatively affect our profits; furthermore, if we chose to contest these allegations, we could be subject to costly and time-consuming litigation or could lose the ability to continue to sell the related products.

Third parties may seek to invalidate or otherwise challenge our patents, through patent litigation and/or initiating proceedings, including re-examinations, inter partes reviews, post-grant reviews and interference proceedings, before the U.S. Patent and Trademark Office. We may initiate litigation to enforce or defend our patents or intellectual property rights; however, litigation can be time consuming, distracting to our operations, costly and may conclude unfavorably for us. In addition, the outcome of patent infringement litigation often is difficult to predict. If we are unsuccessful with respect to any future legal action in the defense of our patents and our patents are invalidated or determined to be unenforceable, our business could be negatively impacted. Even if our patents are determined to be valid or enforceable, it is possible that a competitor could circumvent our patents by effectively designing around the claims of our patents. Accordingly, our patents may not provide us with any competitive advantage.

To the extent third-party patents to which we currently do not hold licenses are necessary for us to manufacture, use or sell our products, we would need to obtain necessary licenses to prevent infringement. In the case of products or services that utilize intellectual property of strategic collaborators or other suppliers, such suppliers may have an obligation to secure the needed license to these patents at their cost. Otherwise, we would be responsible for the cost of these licenses. Royalty payments and other fees under these licenses would erode our profits from the sale of related products and services. Moreover, we may be unable to obtain these licenses on acceptable terms or at all. If we fail to obtain a required license or are unable to alter the design of the product to avoid infringing a third-party patent, we would be unable to continue to manufacture or sell related products.

If a third party commences legal action against us for infringement, or institutes proceedings challenging the validity of our patents, we could be compelled to incur significant costs to defend the action and our management’s attention could be diverted, whether or not the action were to have any merit. We cannot be certain that we could prevail in the action, and an adverse judgment or settlement resulting from the action could require us to pay substantial amounts in damages for infringement or substantial amounts to obtain a license to continue to use the intellectual property that is the subject of the infringement claim.

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We may not maintain adequate insurance coverage to protect us against significant product liability claims.

The testing, manufacturing, marketing, and sale of drugs and diagnostics involve product liability risks. We may not be able to maintain our current product liability insurance at an acceptable cost, if at all. In addition, our insurance coverage may not be adequate for all potential claims. If claims or losses significantly exceed our liability insurance coverage, we may experience financial hardship or potentially be forced out of business.

If we fail to attract and retain key management and qualified scientific and technical personnel, we may not be able to achieve our business objectives.

Members of our management team, including our founder, Chairman and Co-Chief Executive Officer, Dr. Martine Rothblatt, and our President and Co-Chief Executive Officer, Dr. Roger Jeffs, play a critical role in defining our business strategy and maintaining our corporate culture. The loss of the services and leadership of Dr. Rothblatt, Dr. Jeffs or any other members of our senior management team could have an adverse effect on our business. We do not maintain key person life insurance on our senior management team members. In addition, effective succession planning is important to our long-term success. Failure to identify and retain adequate replacements for members of our senior management team and to transfer knowledge effectively could impede the achievement of our business objectives. Our future success also depends on our ability to attract and retain qualified scientific and technical personnel. Competition for skilled scientific and technical personnel in the biotechnology and pharmaceutical industries is intense. Furthermore, our compensation arrangements may not be sufficient to attract new qualified scientific and technical employees or retain such core employees. If we fail to attract and retain such employees, we may not be successful in developing and commercializing new therapies for PAH and other diseases.

Improper handling of hazardous materials used in our activities could expose us to significant remediation liabilities.

Our research and development and manufacturing activities involve the controlled use of chemicals and hazardous substances and we are expanding these activities in both scale and location. In addition, patients may dispose of our products using means we do not control. Such activities subject us to numerous federal, state, and local environmental and safety laws and regulations that govern the management, storage and disposal of hazardous materials. Compliance with current and future environmental laws and regulations can require significant costs; furthermore, we can be subject to substantial fines and penalties in the event of noncompliance. The risk of accidental contamination or injury from these materials cannot be completely eliminated. Furthermore, once chemical and hazardous materials leave our facilities, we cannot control the manner in which such hazardous waste is disposed of by our contractors. In the event of an accident, we could be liable for substantial civil damages or costs associated with the cleanup of the release of hazardous materials. Any related liability could have a material adverse effect on our business.

We may encounter substantial difficulties managing our growth relative to product demand.

We have spent considerable resources building and expanding our offices, laboratories and production facilities, and we are currently seeking regulatory approvals for certain facilities. However, our facilities could be insufficient to meet future demand for our products. Conversely, we may have excess capacity at our facilities if future demand falls short of our projections, or if we do not receive regulatory approvals for the products we intend to produce at our facilities. Constructing our facilities is expensive and our ability to satisfactorily recover our investment will depend on sales of the products manufactured at these facilities in sufficient volume. If we do experience substantial sales growth, we may have difficulty managing inventory levels as marketing new therapies is complicated and gauging future demand can be difficult and uncertain until we possess sufficient post-launch sales experience.

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If we need additional financing and cannot obtain it, our product development and sales efforts may be limited.

We may be required to seek additional sources of financing to meet unplanned or planned expenditures. Unplanned expenditures could be significant and may result from necessary modifications to product development plans or product offerings in response to difficulties encountered with clinical trials. We may also face unexpected costs in preparing products for commercial sale, or in maintaining sales levels of our currently marketed therapeutic products. If we are unable to obtain additional funding on commercially reasonable terms or at all, we may be compelled to delay clinical studies, curtail operations or obtain funds through collaborative arrangements that may require us to relinquish rights to certain products or potential markets.

We may require additional financing to meet significant future obligations. For instance, upon maturity or conversion of our 1.0 percent Convertible Senior Notes due September 15, 2016 (Convertible Notes), subject to certain provisions, we must repay our investors in cash up to the remaining principal balance. Further, in certain circumstances constituting a fundamental change under the Convertible Notes, we may be required to repurchase the Convertible Notes for cash.

Awards granted under our Share Tracking Award Plans (which we collectively refer to as the STAP) entitle participants to receive in cash an amount equal to the appreciation in the price of our common stock, which is calculated as the positive difference between the closing price of our common stock on the date of exercise and the date of grant. Consequently, our STAP may require significant future cash payments to participants to the extent the price of our common stock appreciates and the number of vested STAP awards increases over time. If we do not have sufficient funds to meet such obligations or the ability to secure alternative sources of financing, we could be in default, face litigation and/or lose key employees, which could have a material adverse effect on our business.

Information technology security breaches and other disruptions could compromise our information and expose us to legal responsibility which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers, customers and business partners, and personally identifiable information. The secure maintenance of this information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Such breaches could compromise sensitive and confidential information stored on our networks and expose such information to public disclosure, loss or theft. Any access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disruption of our operations, and damage to our reputation which could adversely affect our business.

Risks Related to Our Common Stock

The price of our common stock can be highly volatile and may decline.

The price of common stock can be highly volatile within the pharmaceutical and biotechnology sector. Consequently, there can be significant price and volume fluctuations in the market that may not relate to operating performance. The following table sets forth the high and low closing prices of our common stock for the periods indicated:

	High		Low
January 1, 2015—September 30, 2015	$	188.56	$	124.93
January 1, 2014—December 31, 2014	$	136.16	$	86.14
January 1, 2013—December 31, 2013	$	114.51	$	51.64

The price of our common stock could decline sharply due to the following factors, among others:

· Failure to meet estimates or expectations of securities analysts;

· Quarterly and annual financial results;

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· Timing of enrollment and results of our clinical trials;

· Announcements by us or others regarding generic or other challenges to the intellectual property relating to our products, including developments with respect to the ANDAs filed by generic companies relating to certain of our Remodulin and Tyvaso patents and to our pending lawsuits defending our patent rights, and the inter partes review petition filed by SteadyMed challenging the validity of one of the patents listed in the Orange Book for Remodulin, Tyvaso and Orenitram;

· Physician, patient, investor or public concerns regarding the efficacy and/or safety of products marketed or being developed by us or by others;

· Changes in, or new legislation and regulations affecting reimbursement of, our therapeutic products by Medicare, Medicaid or other government payers, and changes in reimbursement policies of private health insurance companies, and negative publicity surrounding the cost of high-priced therapies;

· Announcements by us or others of technological innovations or new products or announcements regarding our existing products, including in particular the development of new, competing PAH therapies such as Uptravi (selexipag), which is an oral prostacyclin IP receptor agonist developed by Actelion currently undergoing FDA and EMA review;

· Substantial sales of our common stock by us or our existing shareholders;

· Future issuances of common stock by us or any other activity which could be viewed as being dilutive to our shareholders;

· Rumors among, or incorrect statements by, investors and/or analysts concerning our company, our products, or our operations;

· Failure to obtain or maintain regulatory approvals from the FDA or international regulatory agencies;

· Discovery of previously unknown problems with our marketed products, or problems with our production, regulatory, compliance, promotional, marketing or sales activities that result in regulatory penalties or restrictions on our products, up to the withdrawal of our products from the market;

· Accumulation of significant short positions in our common stock by hedge funds or other investors or the significant accumulation of our common stock by hedge funds or other institutional investors with investment strategies that may lead to short-term holdings; and

· General market conditions.

We may fail to meet third-party projections for our revenues or profits.

Many securities analysts publish quarterly and annual projections of our revenues and profits. Such projections are inherently subject to uncertainty. As a result, actual revenues and profits may fail to meet these projections. Even minor variations in reported revenues and profits compared to securities analysts’ expectations could have a significant adverse impact on the price of our common stock.

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Sales or issuances of our common stock may depress our stock price.

The price of our common stock could decline if: (1) we issue common stock to raise capital or to acquire a license or business; (2) our shareholders transfer ownership of our common stock, or sell substantial amounts of our common stock in the public market; (3) our investors become concerned that substantial sales of our common stock may occur; or (4) we issue shares upon the settlement of warrants relating to the hedging transaction relating to our Convertible Notes. A decrease in the price of our common stock could make it difficult for us to raise capital or fund acquisitions through the issuance of our stock.

Any sales of common stock issued to holders of our Convertible Notes could adversely affect the prevailing market price of our common stock or result in short selling by market participants in expectation of a decline in the price of our common stock.

Our share repurchases may affect the value of our common stock.

In recent years, our Board of Directors has authorized several programs to repurchase our common stock, including a $500.0 million share repurchase program effective during the one-year period that commences on January 1, 2016. The price of our common stock may, in part, reflect expectations that our repurchase program will be fully consummated or that additional repurchase programs will be authorized once the current program terminates. Our current share repurchase program does not obligate us to acquire any specific number of shares and any further repurchase programs are subject to the approval of our Board of Directors. If we fail to meet analyst or investor expectations regarding repurchase programs, our stock price may decline.

We are subject to counterparty risk with respect to the convertible note hedge transaction.

The counterparty to the convertible note hedge transaction we entered into in connection with the issuance of our Convertible Notes (call options) will subject us to counterparty risk in that the counterparty may default on fulfilling its obligations under the call options. Our exposure to the credit risk of the counterparty will not be secured by any collateral. Recent global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If such counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim based on our exposure at that time under the call options. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by the counterparty, we may suffer adverse tax consequences and dilution with respect to our stock due to our obligation to deliver shares subsequent to the conversion of the notes. We cannot provide any assurances as to the future financial stability or viability of the counterparty to our convertible note hedge transaction.

Provisions of Delaware law and our amended and restated certificate of incorporation, fourth amended and restated by-laws, shareholder rights plan, Convertible Notes, convertible note hedge transaction and employment and license agreements, among other things, could prevent or delay a change of control or change in management that may be beneficial to our public shareholders.

Certain provisions of Delaware law and our amended and restated certificate of incorporation, fourth amended and restated by-laws and shareholder rights plan may prevent, delay or discourage:

· A merger, tender offer or proxy contest;

· The assumption of control by a holder of a large block of our securities; and/or

· The replacement or removal of current management by our shareholders.

For example, our amended and restated certificate of incorporation divides our Board of Directors into three classes. Members of each class are elected for staggered three-year terms. This provision may make it more difficult for shareholders to replace the majority of directors. It may also deter the accumulation of large blocks of our common stock by limiting the voting power of such blocks.

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Non-competition and all other restrictive covenants in most of our employment agreements will terminate upon a change of control that is not approved by our Board.

We may be required to repurchase the outstanding Convertible Notes from their holders in the event of a fundamental change and increase the conversion rate in connection with a make whole adjustment event in certain circumstances, including a change of control of our company. This may delay or prevent a change in control of our company that would otherwise be beneficial to our shareholders.

Terminating or unwinding the convertible note hedge transaction could require us to make substantial payments to the counterparty or may increase the price of our common stock. The costs or any increase in stock price that may arise from terminating or unwinding the transaction could make an acquisition of our company significantly more expensive to the purchaser.

Similarly, a change of control, under certain circumstances, could also result in an acceleration of the vesting of outstanding STAP awards. This, together with any increase in our stock price resulting from the announcement of a change of control, could make an acquisition of our company significantly more expensive to the purchaser. We also have a broad-based change of control severance program, under which employees may be entitled to severance benefits in the event they are terminated without cause (or they terminate their employment for good reason) following a change of control. This program could also increase the cost of acquiring our company.

We enter into certain license agreements that generally prohibit our counterparties or their affiliates from taking necessary steps to acquire or merge with us, directly or indirectly throughout the term of these agreements, plus a specified period thereafter. We are also party to certain license agreements that restrict our ability to assign or transfer the rights licensed to us to third parties, including parties with whom we wish to merge, or those attempting to acquire us. These agreements often require that we obtain prior consent of the counterparties to these agreements if we are contemplating a change of control. If these counterparties withhold consent, related agreements could be terminated and we would lose related license rights. For example, both Lilly and Toray have the right to terminate our license agreements relating to Adcirca and esuberaprost, respectively, in the event of certain change of control transactions. These restrictive change of control provisions could impede or prevent mergers that could benefit our shareholders.

Because we do not intend to pay cash dividends, our shareholders must rely on stock appreciation for any return on their investment in us.

We have never declared or paid cash dividends on our common stock. Furthermore, we do not intend to pay cash dividends in the future. As a result, the return on an investment in our common stock will depend entirely upon the future appreciation in the price of our common stock. There can be no assurances that our common stock will provide a return to investors.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Period	Total Number of Shares (or Units) Purchased	Average Price Paid Per Share (or Unit)(1)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs(2)
Beginning repurchase authority					$	57,646,134
July 1, 2015 - July 31, 2015	336,618	$	171.25	336,618	160
August 1, 2015 - August 31, 2015	—	—		—	—
September 1, 2015 - September 30, 2015	—	—		—	—
Total	336,618	$	171.25	336,618	$	160

(1) Average price paid per share calculated at settlement, including commission.

(2) On June 27, 2014, we announced that our Board of Directors authorized a share repurchase program for up to $500.0 million in aggregate repurchases, which became effective August 1, 2014. We fully exhausted the program, repurchasing approximately 3.3 million shares for $500.0 million. Our Board of Directors has authorized a new share repurchase program for up to $500.0 million in aggregate repurchases, which will be effective from January 1, 2016 through December 31, 2016.

Item 6. EXHIBITS

Exhibits filed as a part of this Form 10-Q are listed on the Exhibit Index, which is incorporated by reference herein.

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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


October 27, 2015	/s/ MARTINE A. ROTHBLATT
	By:	Martine A. Rothblatt, Ph.D.
	Title:	Chairman and Co-Chief Executive Officer
		(Co-Principal Executive Officer)


	/s/ ROGER A. JEFFS
	By:	Roger A. Jeffs, Ph.D.
	Title:	President and Co-Chief Executive Officer
		(Co-Principal Executive Officer)


	/s/ JAMES C. EDGEMOND
	By:	James C. Edgemond
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial Officer)

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		EXHIBIT INDEX

Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-76409).

3.2		Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed June 28, 2010.

3.3		Fourth Amended and Restated By-laws of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed June 29, 2015.

3.4		Form of Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit A to Exhibit 4 to the Registrant’s Current Report on Form 8-K filed December 18, 2000.

4.1		Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.

4.2		First Amended and Restated Rights Agreement, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed July 3, 2008.

4.3		Indenture, dated as of October 17, 2011, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee (including form of 1.0% Convertible Senior Note due September 15, 2016), incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed October 17, 2011.

4.4		Form of 1.0% Convertible Senior Notes due September 15, 2016, incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed October 17, 2011.

10.1		Asset Purchase Agreement, dated as of August 18, 2015, by and between the Registrant and AbbVie Ireland Unlimited Company, incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on August 19, 2015.

10.2	*	Settlement Agreement, dated September 29, 2015, between the Registrant and Sandoz Inc.

10.3		Amendment No. 3 to Credit Agreement, dated as of October 12, 2015, by and among the Registrant, the lenders party thereto from time to time, Wells Fargo Bank, National Association, as the Administrative Agent, and a subsidiary of the Registrant, as guarantor.

31.1		Certification of Co-Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2		Certification of Co-Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

31.3		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1		Certification of Co-Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Co-Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.3		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the SEC on October 27, 2015, formatted in Extensible Business Reporting Language (XBRL): (1) the Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014, (2) the Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2015 and 2014, (3) the Consolidated Statements of Comprehensive Income for the three- and nine-month periods ended September 30, 2015 and 2014, (4) the Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2015 and 2014, and (5) the Notes to Consolidated Financial Statements.

* Confidential treatment has been requested with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. The omitted portions of this document have been filed with the Securities and Exchange Commission.

Exhibit 10.2

Pursuant to 17 C.F.R §240.24b-2, confidential information (indicated as [***]) has been omitted and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.

Execution Copy

SETTLEMENT AGREEMENT

This Settlement Agreement (the “Agreement”) is by and among United Therapeutics Corporation (“UTC”), a corporation organized and existing under the laws of the State of Delaware and having a place of business at 1040 Spring Street, Silver Spring, Maryland 20910, and Sandoz Inc. (“Sandoz”), a corporation organized and existing under the laws of the State of Colorado with a principal place of business at 100 College Road West, Princeton, New Jersey 08540. UTC and Sandoz are each referred to herein as a “Party” and may be referred to collectively as the “Settling Parties.”

RECITALS

WHEREAS , UTC is the holder of New Drug Application (“NDA”) No. 21-272, which is approved by the Food and Drug Administration (“FDA”) for the manufacture and sale of treprostinil sodium injection, which UTC markets and sells under the registered trademark Remodulin®.

WHEREAS , UTC claims ownership of and/or exclusive rights in United States Patent Nos. 6,765,117 (the “’117 patent”), 7,999,007 (the “’007 patent”), 8,497,393 (the “’393 patent”), 8,653,137 (the “’137 patent”), and 8,658,694 (the “’694 patent”), which cover the Remodulin ® Drug Products (as defined below).

WHEREAS , Sandoz submitted Abbreviated New Drug Application (“ANDA”) No. 203649, as amended, referencing NDA No. 21-272, seeking approval to market treprostinil sodium injection for subcutaneous or intravenous use as generic versions of the Remodulin ® Drug Products prior to the expiration of the ’117, ’007, ’393, ’137, and ’694 patents.

WHEREAS , UTC filed two lawsuits against Sandoz in the United States District Court for the District of New Jersey (“District Court”), captioned United Therapeutics Corporation v. Sandoz, Inc. , Civil Action No. 3:12-cv-01617-PGS-LHG, and United Therapeutics Corporation v. Sandoz, Inc. , Civil Action No. 3:13-cv-316-PGS-LHG (collectively “ Sandoz I ”), seeking judgments that, inter alia , Sandoz has infringed the ’117 and ’007 patents and judgments ordering that the effective date of any FDA approval for Sandoz to commercially manufacture, make, use, offer to sell, sell, market, or import into the United States the Sandoz ANDA Product (as defined below) be not earlier than the latest of the expiration dates of the ’117 and ’007 patents, and Sandoz filed counterclaims seeking, inter alia , declaratory judgments of invalidity and non-infringement with respect to the ’117 and ’007 patents.

WHEREAS , after a bench trial, which took place on or about May 2 through May 29, 2014, the District Court in Sandoz I issued an Order on August 29, 2014, finding, inter alia , that the proposed Sandoz ANDA Product infringes and induces infringement of the claims of the ’117 patent, that Sandoz does not infringe, directly or indirectly, any of the claims of the ’007 patent, and that both the ’007 and ’117 patents are not invalid (“District Court Judgment”).

WHEREAS , an appeal and cross appeal of Sandoz I are currently pending before the United States Court of Appeals for the Federal Circuit (“ Sandoz I Appeals ”).

WHEREAS , UTC filed a third lawsuit against Sandoz in the District Court, captioned United Therapeutics Corporation v. Sandoz, Inc. , Civil Action No. 3:14-cv-05499-PGS-LHG (“ Sandoz II ”), seeking a judgment that Sandoz has infringed the ’393 patent and a judgment ordering that the effective date of any FDA approval for Sandoz to commercially manufacture, make, use, offer to sell, sell, market, or import into the United States the Sandoz ANDA Product be not earlier than the expiration date of the ’393 patent, and Sandoz filed counterclaims seeking, among other things, a declaratory judgment of non-infringement and invalidity with respect to the ’393 patent.

NOW, THEREFORE , in consideration of the terms, conditions, promises, and covenants set forth in this Agreement, the sufficiency of which is hereby acknowledged, the Settling Parties agree as follows:

1. EFFECTIVE DATE. This Agreement will become effective on the last day on which each of the Settling Parties has executed it (the “Effective Date”).

2. RESOLUTION OF THE DISTRICT COURT CASES AND APPEALS.

a. PARTIAL VACATUR OF DISTRICT COURT JUDGMENT. Within ten (10) days following the Effective Date, the Settling Parties will jointly file with the District Court a motion for an indicative ruling, in a form mutually acceptable to the Settling Parties, pursuant to Federal Rule of Civil Procedure 62.1 whether the District Court would grant a motion pursuant to Rule 60(b) of the Federal Rules of Civil Procedure to vacate the portions of the District Court Judgment that found Sandoz to infringe the ’117 patent and that found Sandoz not to infringe the ’007 patent. Concurrently with the Rule 62.1 motion, the Settling Parties will jointly file a motion to stay the Sandoz I Appeals , in a form mutually acceptable to the Settling Parties, pending the final decision of the District Court regarding the vacatur of the District Court Judgment. In response to the Rule 62.1 motion, if the District Court indicates either that it would grant the Rule 60(b) motion or that the Rule 60(b) motion raises a substantial issue, the Settling Parties shall jointly file, within ten (10) days of such indication by the District Court, a motion in the Federal Circuit pursuant to Federal Rule of Appellate Procedure 12.1 to effect a limited remand from the Sandoz I Appeals to the District Court for the purpose of seeking partial vacatur of the District Court Judgment. If the Federal Circuit grants the motion for limited remand, the Settling Parties shall jointly file, within ten (10) days of the Federal Circuit granting the limited remand, a motion in the District Court to vacate those portions — and only those portions — of the District Court Judgment that found Sandoz to infringe the ’117 patent and that found Sandoz not to infringe, directly or indirectly, the ’007 patent.

b. DISMISSAL OF SANDOZ II . Within ten (10) days following the Effective Date, the Settling Parties will jointly file the stipulation of dismissal, attached hereto as Exhibit A, or such other form as may be agreed by the Settling Parties, with the District Court in Sandoz II , dismissing all of UTC’s claims and all of Sandoz’s counterclaims in Sandoz II without prejudice.

c. DISMISSAL OF SANDOZ I APPEALS .

If the District Court vacates the portions of the District Court Judgment that found Sandoz to infringe the ’117 patent and that found Sandoz not to infringe, directly or indirectly, the ’007 patent, the Settling Parties shall jointly file, within 10 days following such vacatur, the stipulation of dismissal of their respective appeals, attached hereto as Exhibit B, or such other form as may be agreed by the Settling Parties, with the Federal Circuit in the Sandoz I Appeals.

ii.

If the District Court denies the motion for partial vacatur of the District Court Judgment (or if the District Court indicates in response to the Rule 62.1 motion that it will not grant a partial vacatur) or if the Federal Circuit denies the motion to remand for the purpose of seeking a partial vacatur, the Settling Parties shall jointly file, within ten (10) days following such denial, the stipulation of dismissal, attached hereto as Exhibit B, or such other form as may be agreed by the Settling Parties, with the Federal Circuit in the Sandoz I Appeals.

d. Within twenty (20) days following termination of both Sandoz II and the Sandoz I Appeals, each Party and its counsel shall return to the other Party or destroy all Confidential or Highly Confidential discovery that the other Party obtained through or for purposes of Sandoz I and Sandoz II . To the extent such discovery is not returned or destroyed, no Party or its counsel shall provide such discovery to any Third Party unless pursuant to subpoena or other court order and then only after written notice to the other Party sufficient to allow the other Party reasonable time to object to the disclosure of such discovery. Notwithstanding the foregoing, outside counsel for each Party may retain Confidential or Highly Confidential Information contained in outside counsel’s work product, correspondence between outside counsel, deposition transcripts and exhibits, discovery responses, contentions, and copies of pleadings and materials filed with the court. Upon termination of both Sandoz II and the Sandoz I Appeals , the Settling Parties will jointly file motions before the District Court in each of Sandoz I and Sandoz II to modify the respective Protective Orders to relieve any Highly Confidential Qualified Persons, as defined in paragraph 10 of the Stipulated Protective Order in Sandoz I and Sandoz II (Dkt. Nos. 32 and 23, respectively) of the agreement “not to be involved in the preparation or prosecution of patent applications or patents concerning compositions, treatment methods, or formulations containing treprostinil for one (1) year after the non-appealable termination of this action,” set forth in paragraph 10.a.(iii) of that Protective Order.

3. FTC AND DOJ FILINGS. UTC represents that not later than ten (10) business days after the Effective Date, it shall file this Agreement with the FTC and DOJ. Sandoz represents that not later than ten (10) business days after the Effective Date, it shall file this Agreement with the FTC and DOJ. To the extent that any legal or regulatory issues or barriers arise with respect to the Agreement, or any subpart thereof, the Settling Parties shall use commercially reasonable efforts to address any such legal or regulatory issues or barriers (including, for example, any objections by the FTC or DOJ), such as by amending the Agreement, while maintaining the material terms of the transaction.

4. DEFINITIONS .

a. AFFILIATES. As used herein, “Affiliates” means, with respect to UTC, any person or entity that directly or indirectly (through one or more intermediaries) controls, is controlled by, or is under common control with UTC. “Affiliates” means, with respect to Sandoz, solely Sandoz AG, Sandoz Canada Inc., Eon Labs, Inc., Oriel Therapeutics, Inc., and Fougera Pharmaceuticals Inc.

b. AUTHORIZED GENERIC PRODUCT. As used herein, “Authorized Generic Product” means a pharmaceutical product containing treprostinil sodium as the active ingredient and manufactured, used, offered for sale, imported, distributed and/or sold, by or under the authority of UTC or its Affiliates, for use in the Territory under NDA No. 21-272 as a generic version of any of the Remodulin® Drug Products.

c. BASELINE QUARTERLY SALES. As used herein, “Baseline Quarterly Sales” means:

i.		Until the first sale in the Territory by UTC or its Affiliates to a Third Party of an injectable treprostinil product for use with the Remodulin Implantable System, the DEKA pre-filled semi-disposable pump system, or any other pump or delivery system excluded from the definition of Remodulin® Drug Products, the average quarterly sales in the Territory by UTC or its Affiliates to a Third Party of the Remodulin® Drug Products, calculated for UTC’s [*] fiscal quarters preceding the fiscal quarter against which the comparison is to be assessed. By way of example, the Baseline Quarterly Sales calculation against which UTC’s Remodulin® Drug Product sales in the second fiscal quarter of 2015 (i.e. Q2 2015) is assessed shall be the average quarterly sales in the Territory by UTC or its Affiliates to a Third Party of the Remodulin® Drug Products, calculated for the following [] periods: [**].

ii.		Following the first sale in the Territory by UTC or its Affiliates to a Third Party of an injectable treprostinil product for use with the Remodulin Implantable System, the DEKA pre-filled semi-disposable pump system, or any other pump or delivery system excluded from the definition of Remodulin® Drug Products, the average quarterly sales in the Territory by UTC or its Affiliates to a Third Party of the Remodulin® Drug Products, calculated for UTC’s [*] fiscal quarters preceding the quarter of such first sale. By way of example, if such first sale takes place in December 2015 (i.e. in Q4 2015), the Baseline Quarterly Sales for all future assessments shall be the average quarterly sales in the Territory by UTC or its Affiliates to a Third Party of the Remodulin® Drug Products, calculated for the following [] periods: [**].

d. EFFECTIVE LAUNCH DATE. As used herein, “Effective Launch Date” means the earliest of:

i.		June 26, 2018;

ii.		the date on which an Authorized Generic Product is first sold in the Territory;

iii.		[***] any Third Party is permitted by UTC or its Affiliates to sell a Third Party Product in the Territory;

iv.		the date of expiration, disclaimer, abandonment, cancellation, or dedication to the public of [***];

v.		the Market Decline Trigger Date;

vi.		the date on which a Final Court Decision is entered in favor of a Third Party, holding all asserted claims of [*] invalid, unenforceable, or not infringed, unless at the time of such Final Court Decision, [*].

e. FINAL COURT DECISION. As used herein, “Final Court Decision” means a decision of a United States court or agency, in favor of a Third Party, from which no appeal has been or can be taken, excluding any petition for a writ of certiorari or other proceedings before the United States Supreme Court.

f. LICENSED ORANGE BOOK PATENTS . As used herein, “Licensed Orange Book Patents” means [***].

g. LICENSED PATENTS . As used herein, “Licensed Patents” means, collectively, the Licensed Orange Book Patents and, solely with respect to the Sandoz ANDA Product, any other U.S. patent (now or in the future) to which UTC or its Affiliates claims ownership and/or exclusive rights, which may be infringed by the manufacture, use, sale, offer for sale, or importation into the Territory of the Sandoz ANDA Product, and any foreign patent (now or in the future) to which UTC or its Affiliates claims ownership and/or exclusive rights, which may be infringed by the manufacture of the Sandoz ANDA Product anywhere in the world for importation of the Sandoz ANDA Product into and for the Territory.

h. MARKET DECLINE TRIGGER DATE . As used herein, “Market Decline Trigger Date” means the date that is [***] days following the end of any UTC fiscal quarter in which the total sales in the Territory by UTC or its Affiliates to a Third Party of the Remodulin® Drug Products have declined to less than [***] of the Baseline Quarterly Sales, as determined in accordance with Section 10.

i. NET SALES. As used herein, “Net Sales” means gross sales less the following, as accrued and adjusted for amounts actually taken: (i) cash discounts and only to the extent that such amounts are included in invoices and then only to the extent that such amounts are customary and reasonable; (ii) returns (including recalls) and other credits; price protection and shelf stock adjustments; reprocurement charges and other similar charges; shelf stock adjustments; slotting allowances; chargebacks, allowances, discounts, inventory management fees and rebates; (iii) other payments required by law to be made under Medicaid, Medicare or other government special medical assistance programs (including, but not limited to, payments made under the new “Medicare Part D Coverage Gap Discount Program); and (iv) sales, excise or other similar taxes (excluding income taxes). Net Sales shall be determined in accordance with International Financial Reporting Standards (IFRS).

j. REMODULIN ® DRUG PRODUCTS . As used herein, “Remodulin® Drug Products” means the treprostinil injection for subcutaneous or intravenous use products that are described in, and are the subject of, NDA No. 21-272, as supplemented or amended (except to the extent such supplement or amendment pertains solely to the Remodulin Implantable System or the DEKA pre-filled semi-disposable pump system). Remodulin® Drug Products expressly do not encompass treprostinil delivered through any other methods, including but not limited to the Remodulin Implantable System or the DEKA pre-filled semi-disposable pump system and do not encompass any other UTC products such as Tyvaso and/or Orenitram. Remodulin® Drug Products also does not encompass any technology associated with any other UTC product(s) or any applications or uses of treprostinil other than the treprostinil injection for subcutaneous or intravenous use products that are described in, and are the subject of, NDA No. 21-272, as supplemented or amended (except to the extent such supplement or amendment pertains solely to the Remodulin Implantable System or the DEKA pre-filled semi-disposable pump system).

k. SANDOZ ANDA. As used herein, “Sandoz ANDA” means ANDA No. 203649, including any amendments or supplements thereto.

l. SANDOZ ANDA PRODUCT. As used herein, “Sandoz ANDA Product” means the treprostinil injection for subcutaneous or intravenous use pharmaceutical products that are described in, and are the subject of, the Sandoz ANDA (including the active pharmaceutical ingredient (“API”) for inclusion in such products but not API for inclusion in any other products) as generic versions of the Remodulin® Drug Products under NDA No. 21-272, as supplemented or amended (except to the extent such supplement or amendment pertains solely to the Remodulin Implantable System or the DEKA pre-filled semi-disposable pump system). Sandoz ANDA Product shall expressly not include any generic versions of any other UTC drug product(s) or any technology associated with any UTC product(s) or any applications or uses of treprostinil other than the Remodulin® Drug Products.

m. TERRITORY . As used herein, “Territory” means the fifty states of the United States of America, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands and all territories and possessions of the United States of America, United States military bases, and any other location over which the FDA has jurisdiction to regulate the distribution of medicinal products intended for human use.

n. THIRD PARTY . As used herein, “Third Party” means any person or entity other than the Settling Parties and/or their respective Affiliates.

o. THIRD PARTY PRODUCT . As used herein, “Third Party Product” means a Third Party product that is a treprostinil injection for subcutaneous or intravenous use as generic version(s) of any of the Remodulin® Drug Products pursuant to an application under 21 U.S.C. § 355(b)(2) or 21 U.S.C. § 355(j).

5. MUTUAL RELEASES. In consideration of the promises herein, the Settling Parties hereby release and discharge one another as follows:

a. UTC, on behalf of itself and its Affiliates, predecessors or successors in interest, assigns, employees, officers, directors, agents, representatives, attorneys and administrators, hereby absolutely and unconditionally releases, relinquishes, acquits, and forever discharges Sandoz and its Affiliates, and their licensees, sublicensees, customers, wholesalers, manufacturers, suppliers, importers, distributors, insurers, and each of their predecessors or successors in interest, assigns, employees, officers, directors, agents, representatives, attorneys and administrators (the “Sandoz Releasees”), from any and all claims, duties, liabilities, obligations, damages, costs, fees, accountings, interest charges, payments, setoffs, debts, demands, actions, suits, accounts, and causes of action of every kind, nature and description, in law or equity, known or unknown, asserted or unasserted, and whether or not discoverable, arising out of or in any way related to the Sandoz ANDA, the Sandoz ANDA Product, NDA 21-272, and the actions in Sandoz I and/or Sandoz II , including any alleged infringement of UTC’s patent rights by virtue of the manufacture, use, offer for sale, sale or importation of the Sandoz ANDA Product, which UTC ever had from the beginning of time through and including the Effective Date, provided, however, that nothing herein shall constitute a release of any obligations of Sandoz or its Affiliates under this Agreement.

b. Sandoz, on behalf of itself and its Affiliates, predecessors or successors in interest, assigns, employees, officers, directors, agents, representatives, attorneys and administrators, hereby absolutely and unconditionally releases, relinquishes, acquits, and forever discharges UTC and its Affiliates, and their licensees, sublicensees, customers, wholesalers, manufacturers, suppliers, importers, distributors, insurers, and each of their respective predecessors or successors in interest, assigns, employees, officers, directors, agents, representatives, attorneys and administrators (the “UTC Releasees”), from any and all claims, duties, liabilities, obligations, damages, costs, fees, accountings, interest charges, payments, setoffs, debts, demands, actions, suits, accounts, and causes of action of every kind, nature and description, in law or equity, known or unknown, asserted or unasserted, and whether or not discoverable, arising out of or in any way related to the Sandoz ANDA, the Sandoz ANDA Product, NDA 21-272, and the actions in Sandoz I and/or Sandoz II , including any alleged affirmative defense or counterclaim related to the Sandoz ANDA Product which Sandoz ever had from the beginning of time through, and including the Effective Date, provided, however, that nothing herein shall constitute a release of the obligations of UTC or its Affiliates under this Agreement.

6. ATTORNEYS’ FEES. Given that this Agreement will fully resolve the actions in Sandoz I and Sandoz II , including the Sandoz I Appeals , within ten (10) business days of the Effective Date, UTC shall pay Sandoz [***] to defray a portion of the paid attorneys’ fees and costs that Sandoz has already expended in those actions, to reflect a portion of fees and costs that will be saved by UTC by virtue of resolving the actions, and to reflect an amount the Settling Parties seek to avoid expending as they eliminate the uncertainties and risks associated with the pending actions with the execution of this Agreement. The foregoing payment shall be made in United States dollars by wire transfer to the Sandoz bank account designated below. Other than as provided for above, each Party shall bear its own fees and costs, including attorneys’ fees, in the actions Sandoz I and Sandoz II , including the Sandoz I Appeals , and with the preparation and execution of this Agreement as well as any fees and costs in connection with implementing or enforcing the terms of this Agreement.

7. LICENSE .

a. UTC, on behalf of itself and its Affiliates, hereby grants to Sandoz and its Affiliates a non-exclusive, fully-paid up, non-royalty bearing, irrevocable, and, except as set forth in Section 21 hereof, non-assignable, license (the “License”) under the Licensed Patents to make, have made, import, use, sell, offer to sell, market, and distribute the Sandoz ANDA Product in and for the Territory, together with a waiver of any regulatory exclusivities necessary to effectuate the License, to become effective on the Effective Launch Date. This License expressly does not encompass any license under any Licensed Patents to make, have made, use, offer for sale, sell, market, distribute and/or import any product other than the Sandoz ANDA Product. The License further expressly does not encompass any license to make, have made, use, offer for sale, sell, market, distribute and/or import (i) any generic versions of any other UTC drug product(s), including but not limited to Orenitram ® and Tyvaso ® , or (ii) any technology associated with any UTC drug product(s) including but not limited to the Remodulin Implantable System and the DEKA pre-filled semi-disposable pump system or (iii) any applications or uses of treprostinil other than the Remodulin® Drug Products. The limited License conferred under the terms of this agreement expressly and specifically excludes conferring any and all rights, license, sublicense, or approval to the use of any device(s), pump(s), or equipment that may be used with the Sandoz ANDA Product.

b. In the event that the Effective Launch Date is accelerated to any date before June 26, 2018, as provided herein, due to any license, event, action or occurrence caused or initiated by UTC or of which UTC receives actual or constructive notice, UTC shall provide Sandoz with notice within ten (10) days following UTC’s first awareness that such accelerating license, event, action or occurrence will or has taken place, but in no event shall such notice be provided less than one (1) business day prior to the Effective Launch Date, as accelerated, except that in the case of an accelerating Final Court Decision, such notice shall be provided not less than two (2) business days following UTC’s first awareness of such Final Court Decision.

c. Notwithstanding anything to the contrary herein, UTC, on behalf of itself and its Affiliates, hereby further grants to Sandoz a non-exclusive, fully-paid up, non-royalty bearing and, except as set forth in Section 21 hereof, non-assignable, pre-commercialization license under the Licensed Patents (“Pre-Commercialization License”) only to:

i.		anywhere in the world, make and have made the Sandoz ANDA Product, and any raw materials or ingredients necessary for the manufacture of the Sandoz ANDA Product, starting [***] prior to the Effective Launch Date, solely to permit Sandoz to launch, market, use, sell, offer to sell, distribute, and ship the Sandoz ANDA Product beginning on the Effective Launch Date;

ii.		import and have imported the Sandoz ANDA Product, and any raw materials or ingredients necessary for the manufacture of the Sandoz ANDA Product starting [***] prior to the Effective Launch Date, solely to permit Sandoz to launch, market, use, sell, offer to sell, distribute, and ship the Sandoz ANDA Product beginning on the Effective Launch Date;

iii.		offer the Sandoz ANDA Product for sale by engaging in pricing and/or contracting activities (but not “commercial marketing” as defined in 21 C.F.R. § 314.107(c)(4)) starting [***] prior to the Effective Launch Date, solely to permit Sandoz to launch, market, use, sell, distribute, and ship the Sandoz ANDA Product beginning on the Effective Launch Date.

Notwithstanding anything to the contrary herein, from and after the Effective Date of this Agreement, Sandoz shall have the right to engage in and nothing in the Agreement shall constrain Sandoz from [***].

d. To the extent UTC and/or its Affiliates own or control any regulatory exclusivities granted by the FDA that would prevent regulatory approval or marketing of the Sandoz ANDA Product in the United States under the Sandoz ANDA in accordance with the License hereunder, UTC shall, if requested by Sandoz and if applicable, send the FDA, prior to the Effective Launch Date of the License hereunder, a written confirmation of UTC’s and/or its Affiliates’ agreement to waive, as of the Effective Launch Date of the License hereunder, such regulatory exclusivities with respect to the Sandoz ANDA Product and/or the Sandoz ANDA.

e. Except as expressly provided in this Agreement, Sandoz shall not make, have made, use, offer for sale, sell, and/or import the Sandoz ANDA Product in or for the Territory prior to the expiration of the Licensed Patents.

8. UNLICENSED THIRD PARTY LAUNCH. If a Third Party launches a Third Party Product in the Territory without authorization before the Effective Launch Date (“Unlicensed Third-Party Launch”), and UTC fails to seek injunctive relief within [***] calendar days of the Unlicensed Third-Party Launch, then Sandoz may launch the Sandoz ANDA Product in the Territory at the expiration of such [***]-day period, but if UTC seeks injunctive relief against such Third Party within [***] calendar days of the Unlicensed Third-Party Launch, then Sandoz may launch the Sandoz ANDA Product in the Territory only after the earlier of (unless otherwise permitted by this Agreement): (1) [***] calendar days after the Unlicensed Third-Party Launch if injunctive relief is not granted within such period, or (2) [***]. Immediately upon the occurrence of any Unlicensed Third-Party Launch, Sandoz may engage in all activities permitted by the Pre-Commercialization License. Any launch and Pre-Commercialization License activities undertaken by Sandoz pursuant to this Section 8 shall not be a breach of this Agreement but shall cease (unless otherwise permitted by this Agreement) within [***] business days of the date that all Third Parties selling unauthorized Third Party Product are required to cease such sales (including, without limitation, pursuant to a court order or settlement or other agreement with UTC). In consideration for any launch activities undertaken by Sandoz pursuant to this Section 8, Sandoz will pay to UTC a royalty (“At Risk Royalty”) equal to [***] of the Net Sales of the Sandoz ANDA Product sold by Sandoz or its Affiliates in the Territory during the time period permitted under this Section 8. Sandoz will pay the At Risk Royalty on a quarterly basis in United States dollars in immediately available funds to the bank account set forth in Section 14 (Notice). The Unlicensed Third Party Launch Royalty payments are royalty payments for Licensed Patents, to the degree such patents have not been ruled invalid or unenforceable.

9. MOST FAVORED NATION. As of and after the Effective Date, UTC, on behalf of itself and its Affiliates, agrees that if it enters into any agreement, license, sublicense, settlement, covenant, waiver or other authorization of any kind with any Third Party involving a Third Party Product (“Subsequent Third Party Agreement”) that authorizes [***] that are more favorable than set forth in this Agreement, then UTC shall notify Sandoz no later than seven (7) days after execution of such Subsequent Third Party Agreement of such more favorable [***] and, subject to Sandoz’s written consent, this Agreement shall be automatically amended to include such more favorable [***], as applicable. UTC, on behalf of itself and its Affiliates, represents and warrants that, as of the Effective Date, it has not entered into any agreement, license, sublicense, settlement, covenant, waiver or other authorization of any kind with any Third Party with respect to a Third Party Product, that provides for more favorable [***] than those set forth in this Agreement.

10. MARKET DECLINE TRIGGER.

a. Not later than (a) 30 calendar days after the end of each of UTC’s first, second, or third fiscal quarters and (b) 60 calendar days after each of UTC’s fiscal years, during the period beginning on the Effective Date and ending on the Effective Launch Date, UTC shall provide Sandoz with a written report (“ Market Notice ”) stating: (i) the total sales in the Territory by UTC or its Affiliates to Third Parties of the Remodulin® Drug Products for the most recently ended fiscal quarter; and (ii) the determination of the total sales from Section 10(a)(i) divided by the Baseline Quarterly Sales.

b. Sandoz shall have the right to engage any independent certified public accounting firm of nationally recognized standing chosen by Sandoz and reasonably acceptable to UTC (a “CPA Firm”) to conduct an audit, at Sandoz’s sole expense, of the sales books and records of UTC and its Affiliates solely for the purposes of determining the accuracy of any information contained in any Market Notice and whether the Market Decline Trigger Date has occurred. The CPA Firm shall be given access to and shall be permitted to examine and copy such books and records upon five (5) days’ prior written notice to UTC, during regular business hours. Prior to any such examination taking place, UTC may require the CPA Firm to enter into a commercially reasonable and customary confidentiality agreement reasonably acceptable to UTC with respect to the information to which it is given access. The CPA Firm shall be instructed to do the following within twenty (20) days after such written notice to UTC: (i) complete the audit; and (ii) deliver to Sandoz and UTC a report stating its determination of whether the Market Decline Trigger Date occurred, and if so, when. No other information shall be shared with Sandoz.

c. In the event the CPA Firm determines that the Market Decline Trigger Date has occurred, and UTC has not challenged that determination in good faith by notifying Sandoz of such good-faith challenge within five (5) business days of receiving such determination, then the Market Decline Trigger Date shall be deemed to have occurred and, as Sandoz’s sole remedy therefor, UTC shall pay to Sandoz the fees and expenses of the CPA Firm in performing such audit within sixty (60) days after Sandoz delivers an invoice therefor. For the avoidance of doubt, the identification of this sole remedy shall not in any way limit the meaning of term “Market Decline Trigger Date” for purposes of calculating the Effective Launch Date, or the effective date of the license described in Section 7, above.

Should UTC challenge in good faith the determination of the CPA Firm by notifying Sandoz of such good-faith challenge within five (5) business days of receiving such determination, Sandoz may proceed as if the Market Decline Trigger has occurred, and the Settling Parties shall negotiate in good faith for up to ten (10) days following Sandoz’s receipt of such notice regarding whether the CPA Firm correctly determined that the Market Decline Trigger Date has occurred. If the Settling Parties fail to reach agreement within such 10-day period, UTC may challenge the CPA’s determination and Sandoz’s reliance upon such determination through binding confidential arbitration under the Commercial Rules (Expedited) of the American Arbitration Association (AAA) then in effect. Such arbitration will take place in Washington, D.C. before a panel of three (3) arbitrators. Each party will select one (1) arbitrator and those arbitrators will select a third arbitrator who will act as chair. The arbitrators shall have the authority to order injunctive relief and/or award damages. Orders to require arbitration, in aid of arbitral jurisdiction, or for interim measures, and to enforce any arbitral award, may be entered in any court having jurisdiction thereof, including costs and attorneys’ fees incurred in enforcing such award.

11. UTC COVENANTS. UTC, for itself and its Affiliates, hereby finally and irrevocably covenants:

a. Not to sue (or threaten to sue), not to assign to any Third Party a right to sue, not to authorize any Third Party to sue, and not to support or encourage any Third Party to sue in any forum any Sandoz Releasee for infringement of any patent (specifically including, but not limited to, the Licensed Patents), U.S. or foreign, now or in the future, that are owned or controlled by UTC or its Affiliates, asserting or purporting to assert that making, having made, using, promoting, offering for sale, selling, importing or otherwise disposing of Sandoz ANDA Product (or any component or part thereof) in or for the Territory infringes, or induces or contributes to the infringement of, any such patent rights. This nonassertion covenant shall be a covenant that transfers with any sale, license, or other disposition, transfer or grant of rights under the applicable patent rights. UTC shall impose the foregoing covenant on its Affiliates and any Third Party to which UTC or any of its Affiliates may assign, license, sublicense, or otherwise transfer any rights, in each case, that includes the right to assert, to or under the applicable patents or patent applications. For all Licensed Patents, including all patents listed in the Orange Book for the Remodulin® Drug Products, the foregoing covenant shall hereby be treated as a non-exclusive license in the Territory to such patents for the Sandoz ANDA Product solely for the purpose of allowing Sandoz to file and maintain with the FDA a “Paragraph IV Certification” for the Sandoz ANDA under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (as amended or replaced) with respect thereto.

b. Not to take any action directly or indirectly to prevent, delay, limit, or otherwise restrict the launch, manufacture, use, sale, offer for sale, importation or distribution of the Sandoz ANDA Product in or for the Territory by Sandoz and its Affiliates as permitted under the terms of this Agreement;

12. SANDOZ COVENANTS. Sandoz, for itself and its Affiliates, hereby finally and irrevocably covenants not to (a) make, import, use, sell, offer for sale the Sandoz ANDA Product in or for the Territory prior to the Effective Launch Date, except as provided in this Agreement; or (b) challenge, or assist a Third Party in challenging, in the Territory, the validity or enforceability of the Licensed Patents, solely with respect to the Sandoz ANDA Product, except (i) to the extent required to comply with any applicable law, regulation, court or administrative order, or legal or administrative process (solely to the extent necessary to comply therewith), (ii) for the purposes of making and maintaining the applicable Paragraph IV certifications for the Sandoz ANDA Product, or (iii) in response to any claim or purported claim of infringement of the Licensed Patents; it being understood and agreed that Sandoz’s activities identified in Section 7(c) shall not constitute a breach of this Agreement. Notwithstanding the foregoing, nothing herein shall prevent Sandoz from maintaining the Paragraph IV certifications contained in the Sandoz ANDA, nor prevent Sandoz from amending the Sandoz ANDA to include a Paragraph IV certification to any patents that may be listed in the Orange Book for NDA 21-272 after the Effective Date, nor prevent Sandoz from challenging or contesting in any manner whatsoever any patent, including the Licensed Patents, for any product other than the Sandoz ANDA Product, provided that, regardless of the results of such challenge, Sandoz shall not be entitled to accelerate the launch of the Sandoz ANDA Product other than pursuant to this Agreement. UTC, on behalf of itself and its Affiliates, consents that Sandoz maintains the Paragraph IV certifications contained in the Sandoz ANDA pursuant to 21 C.F.R. § 314.94(a)(12)(v).

13. REPRESENTATIONS AND WARRANTIES

a. Each Party represents and warrants to the other, as applicable, that (i) it has the requisite corporate authority to enter into this Agreement, (ii) this Agreement does not conflict with any other agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority over it, (iii) to the extent that any approval or authorization is necessary for its valid and lawful execution, delivery and performance of this Agreement, such approval or authorization has been obtained, and (iv) this Agreement is a binding obligation of it and its Affiliates, enforceable in accordance with its terms, subject, as to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors’ rights generally, and to general equitable principles.

b. UTC represents and warrants that it, and/or its Affiliates, has the sole and exclusive right to license the Licensed Patents to Sandoz under the terms and conditions set forth in this Agreement and that no Third Party has an ownership interest in the Licensed Patents or could lawfully assert a claim of infringement of the Licensed Patents.

c. Nothing in this agreement shall be construed to grant any right to any Third Party proprietary technology, including Remodulin Implantable System, the DEKA pre-filled semi-disposable pump system, any other pump or delivery system for the Sandoz ANDA Product or any other form of treprostinil.

d. Sandoz represents and warrants that it has [***].

14. NOTICE . Any notice, demand, waiver, consent, approval or other communication that is required or permitted to be given to any Party under this Agreement will be in writing, will specifically refer to this Agreement, and will be effective on receipt, as evidenced in writing, when given by registered airmail or certified mail, postage prepaid, or overnight courier, and addressed, unless specified in writing, to the addresses of the Settling Parties below, and effective upon sending if sent by facsimile confirmed by a transmission report:

a. If to UTC:

Andrew Fisher

Chief Strategy Officer

United Therapeutics Corp.

1735 Connecticut Ave., NW

Washington, D.C. 20009

Facsimile: [***]

All payments payable to UTC shall be made to the following bank account:

Bank Account Name:		United Therapeutics Corporation
Account #		[***]
ABA#		[***]
SWIFT:		[***]
Bank Name:		[***]
Bank Address:		[***]
		[***]

b. If to Sandoz

Sandoz Inc.

100 College Road West

Princeton, New Jersey 08540

Attn: General Counsel

Fax: [***]

with a copy to:

Sandoz Inc.

100 College Road West

Princeton, New Jersey 08540

Attn: VP, Intellectual Property

Fax: [***]

All payments payable to Sandoz shall be made to the following bank account:

Bank Name: [***]

Bank Address: [***]

Name on Account: Sandoz Inc.

Account Number: [***]

RT ABA [***]

SWIFT Code: [***]

15. REGULATORY APPROVAL. UTC and its Affiliates shall not, and shall not cause any Third Party to:

a. initiate or otherwise undertake any activity in the Territory, directly or indirectly, against the Sandoz ANDA or the Sandoz ANDA Product to: (i) interfere with Sandoz’s efforts to obtain FDA approval of the Sandoz ANDA Product and the Sandoz ANDA (including, but not limited to, by filing or submission of any Citizen Petitions, correspondence or other written submissions with FDA or any other regulatory or governmental authority); or (ii) interfere with Sandoz’s efforts to launch the Sandoz ANDA Product in the Territory as of the Effective Launch Date under the terms provided by this Agreement;

b. delist the Remodulin® Drug Products with the FDA or delete, remove, designate as “obsolete” or cancel any National Drug Code(s) or any other relevant code(s) for the Remodulin® Drug Products from the applicable National Drug Data File maintained by First Databank (or any successor or equivalent organization) or from any other pricing database.

Sandoz may communicate confidentially with FDA regarding the terms of this Agreement to the extent necessary in its sole discretion to obtain final regulatory approval for the Sandoz ANDA Product and to allow Sandoz to timely introduce and commercialize the Sandoz ANDA Product. Within five (5) business days of Sandoz’s request, UTC shall provide the FDA with written confirmation of the Effective Launch Date and the license, waivers, and covenants herein and any other such information needed to assist Sandoz in effecting the license grants, waivers and covenants contained in this Agreement.

16. SUBLICENSING . Sandoz may not grant any sublicenses under the Licensed Patents or allow any Third Party, whether in connection with a Change of Control, acquisition or otherwise, to practice same or to make, have made, use, offer for sale, sell, distribute, or import the Sandoz ANDA Product, without obtaining the prior written approval of UTC, except as otherwise provided herein.

17. TERM AND TERMINATION .

a. Term. Unless earlier terminated in accordance with the terms of this Section 17, the term of this Agreement (“Term”) will commence on the Effective Date and will remain in effect until the expiration of the last to expire of the Licensed Patents or until entry of any final judgment or order of invalidity of the asserted claims or unenforceability of the Licensed Patents by a court of competent jurisdiction, unless the Settling Parties agree, in writing, to a different term.

b. Termination. Either Party may terminate this Agreement in the event that the other Party materially breaches this Agreement and such material breach is not cured to the reasonable satisfaction of the non-breaching Party within thirty (30) business days after written notice thereof.

18. SPECIFIC ENFORCEMENT . The Settling Parties shall be entitled to specific enforcement of the terms and conditions set forth in this Agreement. In the event that Sandoz materially breaches Section 7, and such breach is not cured pursuant to Section 17(b), UTC shall be entitled to immediate injunctive relief to prevent Sandoz from manufacturing, using, offering to sell, selling, or importing any Sandoz ANDA Product outside the scope of the License granted in Section 7 (and subject to express terms of Section 8). Sandoz acknowledges that uncured, material breach of the License granted in Section 7 would cause UTC irreparable harm.

19. CONFIDENTIALITY . Each of the terms and conditions of this Agreement is and shall be deemed to be confidential and shall not hereafter be disclosed by the Settling Parties or their respective Affiliates, employees, directors, officers, attorneys, agents or representatives to any other person or entity, except:

a. as provided by Sections 2, 3, 7, and 15 of this Agreement;

b. that any Party may disclose such terms as required by law, including without limitation in response to a subpoena or request for production in litigation, SEC reporting requirements, or by the rules or regulations of any stock exchange that the Settling Parties are subject to, or where necessary to enforce the terms of this Agreement;

c. as is necessary for the exercise of the rights of the Settling Parties under this Agreement, including that Sandoz may disclose such terms to (i) suppliers of products associated with the Sandoz ANDA Product as may be reasonably necessary for Sandoz to conduct business with such suppliers, provided that each of such suppliers agrees to be bound in writing to keep such disclosed terms in confidence and not to use any part of such disclosure for any other purpose; and (ii) the FDA as may be reasonably necessary in obtaining and maintaining final approval of the Sandoz ANDA Product, provided that Sandoz requests that the FDA maintain such terms in confidence; and

d. each Party may issue a press release or make a public announcement at any time following the Effective Date indicating that the Settling Parties have settled the actions encompassed in Sandoz I and Sandoz II , that the settlement permits Sandoz to commercially launch its Sandoz ANDA Product on the Effective Launch Date, as defined herein, and that “the settlement does not grant Sandoz any rights other than those required to launch the Sandoz ANDA Product.”

20. ACKNOWLEDGEMENT OF VALIDITY, AND ENFORCEABILITY. Although Sandoz may bring an action to enforce the terms of the License granted in Section 7, Sandoz acknowledges, for the purpose of resolving the pending dispute only, the validity and enforceability of the Licensed Patents with respect to the manufacture, use, sale, offering for sale and importation of the Sandoz ANDA Product in or for the Territory, and agrees not to challenge, in the Territory, the validity and/or enforceability of the Licensed Patents in any proceeding or in any forum solely with respect to the Sandoz ANDA Product, except as otherwise permitted in this Agreement. Sandoz covenants and agrees never in any way to assist voluntarily, appear voluntarily, testify voluntarily, voluntarily offer evidence, or attempt to obtain or produce discovery in any judicial, administrative, or arbitral proceeding, in the Territory, relating in any way to the Licensed Patents solely with respect to the Sandoz ANDA Product, except as otherwise permitted in this Agreement.

21. ASSIGNMENT . No Party may assign any right or obligation hereunder without obtaining the prior written approval of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that either Party may assign this Agreement without such consent (a) to any Affiliate of such assigning Party (for as long as such assignee remains an Affiliate of such Party); or (b) to any purchaser of substantially all of the assets related to this Agreement, including a Third Party who acquires ownership of the Sandoz ANDA and who, as a result of such acquisition becomes subject to the terms and conditions of this Agreement and shall be bound hereby. Notwithstanding the foregoing, Sandoz shall have the right to assign this Agreement to a successor in interest in connection with a Change of Control of Sandoz, whereby this Agreement shall be deemed to be assigned and each person or entity directly or indirectly controlling Sandoz and each affiliate of such person shall become subject to the terms and conditions of this Agreement and shall in writing be bound hereby. For purposes of this Section 21, “Change of Control” shall mean the transfer or disposition (including by way of merger, acquisition, consolidation, sale of stock, sale of assets, operation of law or otherwise), directly or indirectly, of more than 50% of the total assets, equity interests, or voting power of Sandoz. Any attempted assignment in violation of this provision will be void and of no effect.

22. GOVERNING LAW AND VENUE . This Agreement shall be governed by and construed in accordance with laws of the State of New Jersey, without regard to its conflicts of law provisions. Each of the Settling Parties expressly agrees that, by execution of this Agreement, each Party accepts generally and unconditionally the exclusive jurisdiction of the United States District Court for the District of New Jersey, with respect to any dispute, whether legal or equitable, arising out of or relating to the terms of this Agreement, including the validity thereof. In the event federal subject matter jurisdiction cannot be maintained in the United States District Court for the District of New Jersey, each Party accepts jurisdiction in New Jersey state court.

23. FORCE AND EFFECT OF AGREEMENT. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon each of the Settling Parties hereto, and their respective Affiliates, successors and permitted assigns.

24. KNOWING AND VOLUNTARY EXECUTION OF AGREEMENT . This Agreement is executed knowingly, voluntarily and without any duress or undue influence on the part or on behalf of the Settling Parties hereto, with the full intent of releasing all claims arising out of or relating to the dispute that is the subject of the pending litigations. The Settling Parties acknowledge that (a) they have read this Agreement; (b) they have had the opportunity to be represented by and have the advice of counsel of their own choosing during the preparation, negotiation and execution of this Agreement; (c) they understand the terms and consequences of this Agreement and the releases it contains; (d) they have been given a reasonable period of time to consider this Agreement; (e) each provision of this Agreement shall be deemed to have been drafted by all Settling Parties; (f) in the interpretation of this Agreement, no weight shall be given to the drafting of this, or any provision of this, Agreement by any Party; (g) no provision of this Agreement shall be construed against any Party by reason of such provision having been drafted by such Party; and (h) they are fully aware of the legal and binding effect of this Agreement. This Agreement was negotiated by the Settling Parties on an arm’s-length basis, and nothing in this Agreement shall be construed as establishing a special relationship of trust and confidence, fiduciary, partnership or joint venture relationship between the Settling Parties.

25. BINDING EFFECT. Upon the full execution of this Agreement by each of the Settling Parties, this Agreement shall be legal, valid and binding obligations of each of the Settling Parties, enforceable against each Party in accordance with its terms.

26. ENTIRE AGREEMENT AND WAIVER. This Agreement constitutes the entire agreement of the Settling Parties, and supersedes all prior and contemporaneous agreements, understandings, or representations, whether written or oral, with respect to the subject matter hereof. This Agreement may be amended only by a written instrument executed by each of the Settling Parties, except as otherwise provided herein. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by an authorized representative of the waiving Party. No waiver of any provision or this Agreement shall constitute a waiver of any prior, concurrent or subsequent breach of the same or of any other provision hereof. The headings in this Agreement are for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

27. SEVERABILITY. To the fullest extent permitted by applicable law, the Settling Parties waive any provision of law that would render any provision in this Agreement invalid, illegal or unenforceable in any respect. The invalidity or unenforceability of any paragraph or provision of this Agreement shall not affect the validity or enforceability of the remainder of this Agreement, or the remainder of any paragraph or provision. To the fullest extent permitted by applicable law, the Settling Parties will use their best efforts to negotiate a provision in replacement of any provision held invalid, illegal or unenforceable, provided such replacement provision achieves, as nearly as possible, the original intent of the Settling Parties. This Agreement shall otherwise be construed in all respects as if any invalid or unenforceable paragraph or provision were omitted.

28. SIGNATURES. This Agreement may be executed in counterparts, all of which, when taken together, shall constitute one agreement with the same force and effect as if all signatures had been entered on one document. For the purposes of this Agreement, facsimile or scanned signatures shall be deemed an original signature.

IN WITNESS WHEREOF, the Settling Parties hereto have executed this Agreement as follows:

DATED this 29 day of September	United Therapeutics Corporation


	By:	/s/Andrew Fisher

	Title:	Chief Strategy Officer


DATED this 29 day of 2015	Sandoz Inc.


	By:	/s/ Markus Hartmann

	Title:	VP + NA General Counsel

Execution Copy

EXHIBIT A

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY


UNITED THERAPEUTICS CORPORATION,

Plaintiff and Counterclaim-Defendant,

v.	Case No. 3:14-cv-5499 (PGS) (LHG)

SANDOZ, INC.

Defendant and Counterclaim-Plaintiff

STIPULATION OF DISMISSAL WITHOUT PREJUDICE

Pursuant to Rule 41(a)(2), Fed. R. Civ. P., IT IS HEREBY STIPULATED AND AGREED, by and between the parties, through their undersigned counsel of record, that the above-identified consolidated actions be and hereby are voluntarily dismissed in their entirety without prejudice, including all claims and counterclaims, with each party bearing its own attorneys’ fees and costs in connection with the consolidated actions.

		Respectfully submitted,

United Therapeutics Corporation,		Sandoz Inc.,

By its attorneys,		By its attorneys,

BLANK ROME LLP
Stephen M. Orlofsky
David C. Kistler
New Jersey Resident Partners
301 Carnegie Center,
3d Floor
Princeton, NJ 08540
Telephone: (609) 750-7700

OF COUNSEL:

WILSON SONSINI GOODRICH & ROSATI
Douglas Carsten
12235 El Camino Real
Suite 200

Sand Diego, CA 92130

BOIES, SCHILER & FLEXNER LLP
William C. Jackson
5301 Wisconsin Ave, NW
Washington, DC 20015

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY


UNITED THERAPEUTICS CORPORATION,

Plaintiff and Counterclaim-Defendant,

v.	Case No. 3:14-cv-5499 (PGS) (LHG)

SANDOZ, INC.

Defendant and Counterclaim-Plaintiff

ORDER FOR DISMISSAL

In view of the stipulation of the parties, and for good cause,

IT IS HEREBY ORDERED, that the above-identified action is dismissed without prejudice, pursuant to Federal Rule of Civil Procedure 41(a)(2), with each party bearing its own attorneys’ fees and costs in connection with the action.

Dated:

			Honorable Peter Sheridan

			U.S. District Judge

EXHIBIT B

2014-1821, -1849

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

UNITED THERAPEUTICS CORPORATION

Plaintiff-Cross-Appellant,

SANDOZ, INC.

Defendant-Appellant.

Appeal from the United States District Court for the District of New Jersey in Case Nos. 3:12-cv-01617 and 3:13-cv-00316, Hon. Peter G. Sheridan

STIPULATION TO DISMISS CASE NOS. 14-1821, -1849

The parties to this action stipulate that the appeal and cross appeal taken in these cases by means of the notices of appeal filed by United Therapeutics Corporation and Sandoz Inc., respectively, are withdrawn.

The parties agree and represent that:

1. Case Nos. 14-1821 and 14-1849 were docketed in this Court on September 15, 2014.

2. Appellant Sandoz Inc., submitted its Opening Brief on January 14, 2015.

3. Counsel, whose signatures appear on this stipulation, have the express authority of their clients to enter into this stipulation to dismiss the appeal and cross appeal in this action on the terms stated herein with prejudice.

The parties agree that each party shall bear its own costs and attorney fees for this appeal.

Dated:


DOUGLAS CARSTEN
WILSON SONSINI GOODRICH & ROSATI
12235 EL CAMINO REAL, SUITE 200
SAN DIEGO, CA 92130

VERONICA S. ASCARRUNZ
WILSON SONSINI GOODRICH & ROSATI
1700 K. STREET, NW
WASHINGTON, DC 20015

ROBERT A. DELAFIELD
WILSON SONSINI GOODRICH & ROSATI
900 S. CAPITAL OF TEXAS HIGHWAY
AUSTIN, TX 78746

WILLIAM C. JACKSON
RICHARD S. MEYER
BOIES, SCHILLER & FLEXNER LLP
5301 WISCONSIN AVE, NW
WASHINGTON, DC 20015

BILL WARD
BOIES, SCHILLER & FLEXNER LLP
401 WILSHIRE BLVD, SUITE 850
SANTA MONICA, CA 90401

Counsel for Plaintiff-Cross Appellant
United Therapeutics Corporation

Exhibit 10.3

AMENDMENT NO. 3
TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENT

THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENT dated as of October 12, 2015 (as amended, restated, supplemented or otherwise modified from time to time this “ Amendment ”), is entered into by and among UNITED THERAPEUTICS CORPORATION, a Delaware corporation, as Borrower, certain Subsidiaries of the Borrower who are or may become party to the Credit Agreement from time to time, as Guarantors, the lenders who are or may become party to the Credit Agreement from time to time, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Lenders.

RECITALS

WHEREAS, the parties to this Amendment, are parties to that certain Credit Agreement dated as of September 26, 2013, as amended by that certain Amendment No. 1 to Credit Agreement dated as of July 24, 2014, as further amended by that certain Amendment No. 2 to Credit Agreement dated as of July 24, 2015 (collectively, the “ Existing Credit Agreement ” and together with this Amendment and as such Existing Credit Agreement is otherwise amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

WHEREAS, Borrower and Administrative Agent are parties to that certain Security Agreement dated as of September 26, 2013 (the “ Existing Security Agreement ” and together with this Amendment and as such Existing Security Agreement is otherwise amended, restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”).

WHEREAS, the parties to this Amendment now wish to amend the Existing Credit Agreement regarding “Change of Control” and to amend the Existing Credit Agreement and the Existing Security Agreement regarding the addition of a securities sub-account as collateral securing the Obligations of Borrower.

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, Credit Parties and Administrative Agent hereby agree as follows:

SECTION 1.
DEFINED TERMS

Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to them pursuant to the Existing Credit Agreement. Unless otherwise specified, (a) each agreement, instrument or other document referenced in this Amendment shall refer to such agreement, instrument or other document, in each case as amended, restated, supplemented or otherwise modified from time to time; and (b) each definition shall apply to the singular and the plural forms of such terms, as applicable.

SECTION 2.
AMENDMENTS TO EXISTING CREDIT AGREEMENT

2.1 Definitions . Section 1.1 of the Existing Credit Agreement is amended by deleting therefrom the definition of “Collateral Account” and replacing it with the following:

“Collateral Account” means, collectively, the Borrower’s account numbered 24014902 United Therapeutics Corporation #3 Pledged and the sub-account thereunder numbered 24014912 United Therapeutics Corporation #3 Pledged AFS, in each case, maintained at Wells Fargo.

2.2 Change of Control . Section 8.1(k) of the Existing Credit Agreement is deleted in its entirety and is replaced by the following:

(k) Change of Control . (i) As a result of one (1) or more transactions after the date of this Agreement, any “person” or “group” of persons shall have “beneficial ownership” (within the meaning of Section 13(d) or 14(d) of the Exchange Act and the applicable rules and regulations thereunder) of more than thirty-five percent (35%) of the outstanding common stock of Borrower; or (ii) without limiting the generality of the foregoing, during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or a duly authorized committee of such board or governing body or (C) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; provided , that the relationships among the respective shareholders of Borrower on the Closing Date shall not be deemed to constitute all or any combination of them as a “group” for purposes of clause (k)(i).

SECTION 3.
AMENDMENTS TO EXISTING SECURITY AGREEMENT

3.1 Collateral Description . Section 1.1(a) of the Existing Security Agreement is deleted in its entirety and is replaced by the following:

(a) Investment Management Securities Account No. 24014902 United Therapeutics Corporation #3 Pledged, and the sub-account thereunder Account No. 24014912 United Therapeutics Corporation #3 Pledged AFS, in the case of such account and such sub-account of the Pledgor maintained with Wells Fargo and all successor and replacement accounts, regardless of the numbers of such accounts or the offices at which such accounts are maintained (collectively, the “ Securities Account ”) and all rights of the Pledgor in connection with the Securities Account, and all investment property, security entitlements, financial assets, certificated securities, uncertificated securities (including mutual funds shares), money, cash, currency, deposit accounts, instruments, general intangibles, and all other investments or property of any sort now or hereafter held, carried, maintained or administered in the Securities Account in the name of or for the benefit of the Pledgor;

SECTION 4.
CONDITIONS PRECEDENT

This Amendment shall be effective upon the date as of which there is satisfaction (or waiver in writing by Administrative Agent) of each of the following conditions precedent (and with respect to each agreement, document or other deliverable hereunder, each such item shall be in form and substance satisfactory to Administrative Agent) (the “ Closing Date ”):

(a) Receipt by Administrative Agent of this Amendment executed and delivered by each Credit Party.

(b) Receipt by Administrative Agent of a certificate of a Responsible Officer of each Credit Party substantially in the form attached as Exhibit J to the Existing Credit Agreement certifying as to the incumbency and genuineness of the signature of each officer of such Credit Party executing this Amendment and certifying that attached thereto is a true, correct and complete copy of (A) the articles or certificate of incorporation or formation of such Credit Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation or formation, (B) the bylaws or other governing document of such Credit Party as in effect on the Closing Date, (C) resolutions duly adopted by the board of directors (or other governing body) of such Credit Party authorizing and approving the transactions contemplated pursuant to this Amendment and the execution, delivery and performance of this Amendment, and (D) a certificate as of a recent date of the good standing of each Credit Party under the laws of its jurisdiction of organization.

(c) Receipt by Administrative Agent of all other certificates, opinions, agreements, instruments and documents, as Administrative Agent determines necessary or appropriate in connection with this Amendment.

(d) Immediately prior to the Closing Date and immediately after the Closing Date, no Default or Event of Default shall have occurred and be continuing.

SECTION 5.
RATIFICATION AND AGREEMENT

Credit Parties hereby ratify the Loan Documents and acknowledge, agree and affirm that, from and after the Closing Date, (a) Credit Parties remain bound by all terms of the Loan Documents, as applicable, (b) Credit Parties are responsible for the continuing observance and full performance of their respective obligations pursuant to the Loan Documents and (c) the obligations of Credit Parties pursuant to the Loan Documents remain unchanged and in full force and effect, other than as expressly provided for in this Amendment.

SECTION 6.
REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES

Each Credit Party represents and warrants that no Default or Event of Default shall have occurred and be continuing as of the Closing Date and that the representations and warranties set forth in the Loan Documents, as applicable, are true and correct in all material respects as of the Closing Date, except to the extent that any such representations and warranties relate, by their terms, to a prior date, in which case such representations and warranties were true and correct in all material respects (except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, in which case such representation and warranty shall be true and correct in all respects as of such earlier date) as of such prior date.

SECTION 7.
INTENTIONALLY OMITTED

SECTION 8.
MISCELLANEOUS

8.1 Entirety . This Amendment and the other Loan Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

8.2 Counterparts/Fax/Email . This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment by fax or email shall be effective as an original and shall constitute a representation that an original shall be delivered.

8.3 Governing Law . THIS AMENDMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).

8.4 Further Assurances . The parties to this Amendment agree to promptly take such actions, at the expense of Borrower and upon the request of any of the other parties to this Amendment, as are reasonably necessary to carry out the intent of this Amendment, in each case as such actions (a) must be reasonably agreed to by all parties to this Amendment and (b) shall not increase the liabilities or burdens of Administrative Agent.

8.5 Severability; Waivers . If any part of this Amendment is not enforceable, the rest of the Amendment may be enforced. If Administrative Agent waives an Event of Default, it may enforce a later Event of Default. Any consent or waiver under this Amendment must be in writing.

8.6 Attorneys’ Fees . Borrower shall pay the reasonable attorneys’ fees and expenses incurred by Administrative Agent in connection with the preparation, negotiation, closing and enforcement of this Amendment and the matters related thereto. Such payment by Borrower shall be made within thirty (30) days after Borrower’s receipt of an invoice regarding any such fees and expenses.

8.7 Indemnification . Borrower will indemnify and hold each Lender, Administrative Agent, their respective parent entities (direct and indirect, including without limitation without Wells Fargo & Company), subsidiaries and Affiliates (including without limitation Wells Fargo Bank, National Association) and all of their respective directors, officers, employees, agents, successors, attorneys and assigns (individually, an “ Indemnitee ” and collectively, the “ Indemnitees ”) harmless from any loss, liability, damages, judgments, and costs of any kind relating to or arising directly or indirectly out of (a) this Amendment or any document executed pursuant hereto, (b) any credit or financing extended or committed by any Lender to Borrower under any Loan Document, and (c) any litigation or proceeding related to or arising out of this Amendment, any such document, or any such credit or financing; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (x) the gross negligence, willful misconduct or intentional bad acts of such Indemnitee or (y) any material breach by such Indemnitee of any Loan Document. This indemnity includes but is not limited to attorneys’ fees and expenses (including without limitation the allocated cost of in-house counsel). This indemnity will survive repayment of Borrower’s obligations to Administrative Agent and Lenders pursuant to the Loan Documents. All sums due to any Indemnitee hereunder shall be obligations of Borrower, due and payable immediately without demand.

8.8 Notices . Unless otherwise provided in this Amendment or in another Loan Document, all notices required under this Amendment shall be delivered in accordance with the notice requirements of the Loan Documents.

8.9 Headings . Article and paragraph headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Amendment.

8.10 Joint and Several Liability . The obligations of Credit Parties pursuant to this Amendment are joint and several in nature.

8.11 Continued Effectiveness of Loan Documents . Except as expressly set forth in this Amendment, the terms and provisions of the Loan Documents shall remain in full force and effect.

[signatures on the following pages]

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date above.

BORROWER:

	UNITED THERAPEUTICS CORPORATION, as Borrower


	By:	/s/ James Edgemond
	Name:	James Edgemond
	Title:	Chief Financial Officer and Treasurer

[signature pages continue]

AMENDMENT NO. 3 TO CREDIT AGREEMENT

GUARANTOR:

	LUNG BIOTECHNOLOGY PBC (successor-in-interest to Lung Biotechnology Inc.), as a Guarantor


	By:	/s/ James Edgemond
	Name:	James Edgemond
	Title:	Chief Financial Officer and Treasurer

[signature pages continue]

AMENDMENT NO. 3 TO CREDIT AGREEMENT

AGENT AND LENDERS:

	WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Administrative Agent and a Lender


	By:	/s/ Barbara K. Angel
	Name:	Barbara K. Angel
	Title:	Senior Vice President

[signature pages end]

AMENDMENT NO. 3 TO CREDIT AGREEMENT

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Martine A. Rothblatt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Therapeutics Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2015

	/s/ MARTINE A. ROTHBLATT
	By:	Martine A. Rothblatt, Ph.D.
	Title:	Chairman and Co-Chief Executive Officer
		(Co-Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Roger A. Jeffs, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Therapeutics Corporation;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2015

	/s/ ROGER A. JEFFS
	By:	Roger A. Jeffs, Ph.D.
	Title:	President and Co-Chief Executive Officer
		(Co-Principal Executive Officer)

EXHIBIT 31.3

CERTIFICATION PURSUANT TO RULE 13a-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, James C. Edgemond, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Therapeutics Corporation;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2015

	/s/ JAMES C. EDGEMOND
	By:	James C. Edgemond
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of United Therapeutics Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Martine A. Rothblatt, Co-Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 27, 2015	/s/ MARTINE A. ROTHBLATT
	Martine A. Rothblatt, Ph.D.
	Chairman and Co-Chief Executive Officer
	(Co-Principal Executive Officer)
	United Therapeutics Corporation

THE FOREGOING CERTIFICATION IS BEING FURNISHED SOLELY PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 AND IS NOT BEING FILED AS PART OF THE FORM 10-Q OR AS A SEPARATE DISCLOSURE DOCUMENT.

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO UNITED THERAPEUTICS CORPORATION AND WILL BE RETAINED BY UNITED THERAPEUTICS CORPORATION AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of United Therapeutics Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Roger A. Jeffs, Co-Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 27, 2015	/s/ ROGER A. JEFFS
	Roger A. Jeffs, Ph.D.
	President and Co-Chief Executive Officer
	(Co-Principal Executive Officer)
	United Therapeutics Corporation

THE FOREGOING CERTIFICATION IS BEING FURNISHED SOLELY PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 AND IS NOT BEING FILED AS PART OF THE FORM 10-Q OR AS A SEPARATE DISCLOSURE DOCUMENT.

EXHIBIT 32.3

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of United Therapeutics Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, James C. Edgemond, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 27, 2015	/s/ JAMES C. EDGEMOND
	James C. Edgemond
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)
	United Therapeutics Corporation

THE FOREGOING CERTIFICATION IS BEING FURNISHED SOLELY PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 AND IS NOT BEING FILED AS PART OF THE FORM 10-Q OR AS A SEPARATE DISCLOSURE DOCUMENT.