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TABLE OF CONTENTS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

Commission file number 0-26301

United Therapeutics Corporation
(Exact Name of Registrant as Specified in Its Charter)

(301) 608-9292
Registrant's Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ý    No o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o    No ý

          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 ý    No o

          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 o    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ý

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

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

          The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on the closing price on June 30, 2009, as reported by the NASDAQ Global Select Market was approximately $1,923,449,000.

          The number of shares outstanding of the issuer's common stock, par value $0.01 per share, as of February 19, 2010, was 54,608,343.

DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the registrant's definitive proxy statement for the registrant's 2010 annual meeting of shareholders scheduled to be held on June 28, 2010, are incorporated by reference in Part III of this Form 10-K.

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PART I

ITEM 1.    BUSINESS

        We are a biotechnology company focused on the development and commercialization of unique products to address the unmet medical needs of patients with chronic and life-threatening conditions.

        Our key therapeutic platforms are:

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Prostacyclin Analogues, which are stable synthetic forms of prostacyclin, an important molecule produced by the body that has powerful effects on blood vessel health and function. Our lead product is Remodulin® (treprostinil) Injection (Remodulin) to be administered subcutaneously or intravenously for the treatment of pulmonary arterial hypertension (PAH). The United States Food and Drug Administration (FDA) initially approved Remodulin in 2002 for subcutaneous (under the skin) administration. Subsequently, the FDA broadened its approval of Remodulin for intravenous (in the vein) use and for the treatment of patients who require transition from Flolan®, the first drug approved by the FDA for the treatment of PAH. In addition to the United States, Remodulin is approved in many other countries, primarily for subcutaneous use. In July 2009, the FDA approved Tyvaso® (treprostinil) Inhalation Solution (Tyvaso), an inhaled prostacyclin therapy for the treatment of PAH. We commenced commercial sales of Tyvaso in the third quarter of 2009. Our oral tablet of treprostinil diethanolamine is in the later stages of development. We are also developing modified release beraprost (beraprost-MR), another oral prostacyclin analogue, for the treatment of PAH;



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Phosphodiesterase Type 5 (PDE-5) Inhibitors, which act to inhibit the degradation of cyclic guanosine monophosphate (cGMP) in cells. cGMP is activated by nitric oxide (NO) to signal relaxation of vascular smooth muscle. Our PDE-5 inhibitor product is Adcirca® (tadalafil) tablets (Adcirca), a once-daily oral therapy for the treatment of PAH. We acquired certain exclusive commercialization rights to Adcirca from Eli Lilly and Company (Lilly) in 2008. In May 2009, the FDA approved Adcirca for the treatment of PAH. We commenced commercial sales of Adcirca in the third quarter of 2009;



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Monoclonal Antibodies, which act by targeting tumor-associated antigens on cancer cells. We are developing the antibodies 3F8 MAb and 8H9 MAb for the treatment of neuroblastoma and metastatic brain cancer, respectively. We began a Phase II clinical trial in the second quarter of 2009 with 3F8 in primary refractory neuroblastoma; and



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Glycobiology Antiviral Agents, which are a novel class of small, sugar-like molecules that have shown pre-clinical indications of efficacy against a broad range of viruses, such as hepatitis C, dengue fever and certain influenza viruses. We are currently conducting preclinical tests on potential compounds for further development.

        We devote most of our resources to developing products within our key therapeutic platforms. We also devote our resources to developing products in other therapeutic platforms and to the commercialization and further development of telemedicine products and services, principally for the detection of cardiac arrhythmias (abnormal heart rhythms).

        We generate revenues from the sale of Remodulin, Tyvaso and Adcirca (which we refer to as our Commercial Products) and telemedicine products and services. Our sales and marketing staff for our Commercial Products, which is supplemented by our specialty pharmaceutical distributors, supports the commercial availability of our Commercial Products in the countries in which they are approved.

        United Therapeutics was incorporated in Delaware in June 1996. Our principal executive offices are located at 1040 Spring Street, Silver Spring, Maryland 20910. We also maintain executive offices at 55 T.W. Alexander Drive, Research Triangle Park, North Carolina 27709.

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        Unless the context requires otherwise or unless otherwise noted, all references in this Annual Report on Form 10-K to "United Therapeutics" and to the "company", "we", "us" or "our" are to United Therapeutics Corporation and its subsidiaries.

Our Products

        Our product portfolio includes the following as of February 15, 2010:

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We have obtained approval in 23 member countries of the European Union (EU), as well as in certain European countries that are not members of the EU. We have received formal approval letters and pricing approval in most of these countries.

Pulmonary Arterial Hypertension

        PAH is a life-threatening disease that affects the blood vessels in the lungs and is characterized by increased blood pressure from the heart to the lungs. The elevated pressure in the pulmonary arteries strains the right side of the heart as it pumps blood to the lungs, which eventually leads to right heart failure and, ultimately, death. PAH is characterized by structural changes in blood vessel walls, the aggregation of platelets and an alteration of smooth muscle cell function. It is estimated that PAH affects between 100,000 and 200,000 individuals worldwide. In recent years, as awareness of PAH has

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grown, we have seen an increase in the number of people diagnosed with the disease. However, only a small fraction of patients with PAH are being treated due to the rarity of the disease and the complexity of diagnosing it. There is scientific interest in identifying easier, less invasive methods of diagnosing PAH. If this research is successful, more patients could be diagnosed at an earlier stage of the disease.

        The complexity of diagnosing PAH reflects in part the current uncertainties surrounding the etiology and pathophysiology of the condition. Currently, treatment of PAH focuses on three distinct molecular pathways that have been implicated in the disease process: the endothelin (ET) pathway, the nitric oxide (NO) pathway, and the prostacyclin pathway.

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Endothelin Receptor Antagonists.  PAH patients have been shown to have elevated levels of ET-1, a naturally occurring substance in the body that causes constriction and structural changes of the pulmonary blood vessels. Therefore, one established therapeutic approach has been to block the action of endothelin with drugs that are known as endothelin receptor antagonists (ETRAs).



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PDE-5 Inhibitors.  Patients with PAH have also been shown to have reduced levels of the enzyme responsible for producing NO, a naturally occurring substance in the body that causes relaxation of the pulmonary blood vessels. NO produces this effect by increasing intracellular levels of an intermediary known as cyclic guanosine monophosphate (cGMP). Therefore, another established therapeutic approach has been to inhibit the degradation of cGMP, using drugs that are known as PDE-5 inhibitors.



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Prostacyclin Analogues.  Finally, patients with PAH have been shown to have reduced levels of prostacyclin, a naturally occurring substance that has the effect of relaxing the pulmonary blood vessels, preventing platelet aggregation, and inhibiting the proliferation of smooth muscle cells in the pulmonary vessels. Therefore, drugs that mimic the action of prostacyclin, known as prostacyclin analogues, are also established PAH treatments.

Because any or all of these three pathways may be therapeutic targets in a patient, the described three classes of drugs are used alone or sometimes in combination to treat patients with PAH. We currently market Remodulin and Tyvaso, prostacyclin analogues, and Adcirca, a PDE-5 inhibitor, for the treatment of PAH.

Remodulin

        Our lead product for treating PAH is Remodulin (treprostinil) Injection, the main ingredient of which is treprostinil, a prostacyclin analogue. We sell Remodulin to our specialty pharmaceutical distributors in the United States at a discount from an average wholesale price recommended by us, and to our international distributors at a transfer price set by us. We recognized approximately $331.6 million, $269.7 million and $200.9 million in Remodulin revenues, representing 90%, 96% and 95% of our net revenues in 2009, 2008 and 2007, respectively. In May 2002, Remodulin was approved by the FDA as a continuous subcutaneous infusion for the treatment of PAH in patients with New York Heart Association (NYHA) Class II-IV (moderate to severe) symptoms. In November 2004, the FDA expanded its approval to permit continuous intravenous infusion of Remodulin for patients who cannot tolerate subcutaneous infusion. In March 2006, the FDA expanded its approval to include transition of patients to Remodulin from Flolan® (epoprostenol), the first FDA-approved prostacyclin therapy for PAH, to reduce the rate of clinical deterioration. Remodulin is also approved as a continuous subcutaneous infusion treatment for various forms of PAH in 33 countries throughout the world, and as a continuous intravenous infusion treatment for various forms of PAH in Canada, Israel, Mexico, Peru and Argentina. Applications for approval for both subcutaneous and intravenous Remodulin are under review in other countries. We continue to work on expanding Remodulin commercialization to other new territories, including Japan.

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        Flolan is delivered continuously through a surgically implanted intravenous catheter connected to an external pump. Flolan is approved for the treatment of patients with certain subsets of late-stage PAH. Generic formulations of Flolan are also available. We believe Remodulin provides patients with a less invasive alternative to Flolan and its equivalents. In contrast to Flolan, Remodulin is stable at room temperature and lasts significantly longer inside the human body. These attributes allow for safer and more convenient drug delivery to patients. Unlike Flolan, Remodulin can be delivered by subcutaneous infusion with a pager-sized miniature pump. Subcutaneous delivery of Remodulin also eliminates the risk of central venous catheter infection and the hospitalization required to begin intravenous infusion. Remodulin's extended presence in the body may also reduce the risk of rebound PAH, and possibly death, if treatment is abruptly interrupted. The stability of Remodulin also allows it to be packaged as an aqueous solution, so patients do not have to mix the drug, as they do with Flolan. Remodulin can be continuously infused for up to 48 hours before refilling the infusion pump, unlike Flolan, which must be mixed and refilled every 24 hours. Treprostinil, the active ingredient in Remodulin, is highly soluble in an aqueous solution, which enables us to manufacture Remodulin in highly concentrated solutions. This allows therapeutic concentrations of Remodulin to be delivered at low flow rates via miniaturized infusion pumps for both subcutaneous and intravenous infusion. Lastly, Remodulin does not require the patient to keep the drug cool during infusion. This eliminates the need for cooling packs or refrigeration to keep it stable, as is required with Flolan due to Flolan's chemical instability at room temperature.

        In June 2008, the FDA approved a generic version of Flolan, developed by GeneraMedix, Inc. (GeneraMedix), that is stable at room temperature, but still shares all of Flolan's other attributes including, but not limited to, risk of central venous catheter infection, required hospitalization at the start of treatment, shorter half-life increasing risk of rebound PAH, mixing, greater frequency of pump refills and larger pump size. In February 2009, GeneraMedix licensed the commercial rights for its generic Flolan to Actelion Pharmaceuticals Ltd (Actelion). Actelion also markets Tracleer® and Ventavis® for the treatment of PAH.

        There are noteworthy adverse events associated with Remodulin. When infused subcutaneously, Remodulin causes varying degrees of infusion site pain and reaction (redness and swelling) in most patients. Patients who cannot tolerate the site pain related to use of subcutaneous Remodulin may instead use intravenous Remodulin. Intravenous Remodulin is delivered continuously by an external pump through a surgically implanted central venous catheter, similar to Flolan. When delivered intravenously, Remodulin bears the risk of a serious bloodstream infection known as sepsis, as does Flolan.

        In January 2007, the results of a prospective, open-label study demonstrated that stable patients with PAH can be safely transitioned from Flolan to intravenous Remodulin using a rapid switch protocol.

FDA Approval of Subcutaneous and Intravenous Remodulin

        We filed a New Drug Application with the FDA for Remodulin in late 2000. In May 2002, the FDA approved Remodulin as a continuous subcutaneous infusion for the treatment of PAH in patients with NYHA class II-IV symptoms to diminish symptoms associated with exercise. Remodulin is approved for all types of PAH and is the only PAH prostacyclin analogue therapy approved for patients with NYHA class II-IV symptoms.

        In July 2003, we opened an Investigational New Drug Application (IND) for the development of Remodulin by intravenous delivery for the treatment of PAH. A late 2003 study performed in healthy volunteers established that intravenous and subcutaneous Remodulin were bioequivalent (meaning that the two routes of infusion result in comparable levels of treprostinil in the blood).

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        In January 2004, we filed a Supplemental New Drug Application with the FDA to request approval for intravenous Remodulin for the treatment of PAH. In November 2004, based on data establishing intravenous Remodulin's bioequivalence with the previously approved subcutaneous Remodulin, the FDA approved intravenous Remodulin for those not able to tolerate subcutaneous infusion.

International Regulatory Review of Subcutaneous and Intravenous Remodulin

        Remodulin for subcutaneous use is approved in countries throughout the world. We used the mutual recognition process, described more fully in Governmental Regulation, to obtain approval of subcutaneous Remodulin in most countries in the EU. The mutual recognition process for subcutaneous Remodulin was completed in August 2005, with positive decisions received from most EU member countries. We withdrew our applications in the Republic of Ireland (Ireland), Spain and the United Kingdom (UK) following a request for additional documentation from these countries. A license variation for intravenous Remodulin will be resubmitted once our compulsory five-year renewal application for subcutaneous Remodulin is approved, which we believe will occur in the first half of 2010. At that time, we will submit the intravenous Remodulin license variation to our host nation, France.

        Under the named-patient system, we are permitted to import Remodulin into EU member countries for sale to hospitals for use in treating specifically identified patients. We will continue to sell (but not market) Remodulin under the named-patient system in certain EU member countries where Remodulin is not approved. In December 2009, we notified the hospitals and physicians in the UK and Ireland that we will not be providing Remodulin therapy for new PAH patients after March 31, 2010. We will continue to support and provide Remodulin to PAH patients who start Remodulin therapy prior to March 31, 2010, for as long as it is required for each patient. Antigen International Ltd. (part of Goldshield Group Ltd.), our Remodulin distributor in the UK and Ireland, is disputing our decision and has filed an arbitration request. We are currently in the preliminary stages of the arbitration process.

Tyvaso

        We commenced commercial sales of Tyvaso in September 2009. We sell Tyvaso at a discount from an average wholesale price recommended by us to the same specialty pharmaceutical distributors in the United States that distribute Remodulin. In 2009, we recognized approximately $20.3 million in Tyvaso revenues, representing 5% of our net revenues. We did not recognize any revenues from Tyvaso in 2008 and 2007.

        Currently, the only other FDA approved inhaled prostacyclin analogue is Ventavis. Ventavis is marketed by Actelion in the United States and by Bayer Schering Pharma AG in Europe. The active ingredient in Ventavis, iloprost, has a half-life of approximately 20 to 30 minutes and can cause a decrease in systemic blood pressure if the drug is administered at too high a dose. As a result, Ventavis is inhaled via a nebulizer six to nine times per day at a low dose. Per its label, each Ventavis inhalation consists of 4 to 10 minutes of continuous inhalation via the nebulizer. Tyvaso has a longer half-life and greater selectivity to the lungs than Ventavis. Thus, patients only need to take Tyvaso four times a day, inhaling nine breaths during each two-to-three-minute treatment session. We are conducting an open-label study in the United States to investigate the clinical effects of switching patients from Ventavis to Tyvaso. Data is being prepared and has been accepted for presentation at the American Thoracic Society scientific symposia in May 2010.

        Tyvaso has been generally well tolerated in our trials, and adverse events appeared to be similar to those previously reported for treprostinil or due to administration by inhalation. The most common adverse events seen in the trial were transient cough, headache, nausea, dizziness and flushing.

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Tyvaso Inhalation System

        The Tyvaso Inhalation System, an ultra-sonic nebulizer and related accessories, was exclusively used for administration of Tyvaso in the TRIUMPH-1 trial. The Tyvaso Inhalation System is manufactured by NEBU-TEC International Med Products Eike Kern GmbH (NEBU-TEC), a German company. The Tyvaso Inhalation System is CE-marked in Europe, which means that the device conforms to EU health and safety requirements. In December 2008, we entered into an Agreement of Sale and Transfer with NEBU-TEC under which NEBU-TEC would sell to us its Tyvaso Inhalation System business and all associated assets and rights upon FDA approval of Tyvaso and the use of the Tyvaso Inhalation System with Tyvaso. As specified in the agreement, the closing and the transfer of all the associated assets and rights occurred in September 2009. Our agreement with NEBU-TEC also gives us the right to purchase their next generation nebulizer, the SIM-Neb. For additional details on the terms of our agreement with NEBU-TEC, see NEBU-TEC Agreement of Sale and Transfer below.

FDA Approval of Tyvaso

        In June 2008, we submitted a New Drug Application (NDA) to obtain FDA approval to market Tyvaso for the treatment of PAH in the United States. On July 30, 2009, the FDA approved Tyvaso for the treatment of PAH using the Tyvaso Inhalation System. Tyvaso is indicated to increase walk distance in patients with NYHA Class III symptoms of PAH, which includes multiple etiologies such as idiopathic and familial PAH, as well as PAH associated with scleroderma and congenital heart disease.

        In connection with the Tyvaso approval, we have agreed to a post-marketing requirement (PMR) and certain post-marketing commitments (PMCs). PMRs and PMCs are studies that sponsors conduct after FDA approval to gather additional information about a product's safety, efficacy, or optimal use. PMRs are required studies; whereas, a sponsor voluntarily commits to conduct PMCs. We are required to provide the FDA annual updates on our PMR and PMCs. Failure to complete the studies or adhere to the timelines set by the FDA for the PMR could result in penalties, including fines or withdrawal of Tyvaso from the market, unless we are able to demonstrate good cause for not completing the studies or adhering to our timelines.

        In accordance with the PMR, we will conduct a long-term observational study in the U.S. that will include 1,000 patient-years of follow-up in Tyvaso-treated patients, and 1,000 patient-years of follow-up in matched control patients receiving other PAH treatments to evaluate the potential association between Tyvaso and oropharyngeal and pulmonary toxicity. We have submitted a draft protocol of the PMR to the FDA for review, and have committed to submitting the results by December 15, 2013.

        The PMC requires us to modify the Tyvaso Inhalation System and perform a usability analysis followed by a human factors study, and we will conduct a study in healthy volunteers to collect data to verify expected dosing with the modified device. We have submitted draft protocols for these PMCs to the FDA for review, and we have committed to submitting a supplement to our Tyvaso NDA describing the results no later than October 31, 2010. The human factors study will commence in March 2010; therefore, we believe we are on track to meet the timeline for final report submission.

International Regulatory Review of Tyvaso

        In April 2004, the EMA designated Tyvaso an orphan medicinal product for the treatment of both PAH and chronic thromboembolic pulmonary hypertension. We filed an MAA in December 2008 for Tyvaso and the Tyvaso Inhalation System with the EMA using the centralized filing process. See Governmental Regulation below for further discussion on the centralized filing process for the EU. In February 2010, we withdrew our MAA from consideration by the EMA due to the EMA's major objection related to findings of non-compliance with good clinical practice (GCP) at two clinical sites. The EMA stated that these findings would preclude a recommendation for approval of Tyvaso in the

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EU. The EMA had no major objections at the time of withdrawal related to the safety or efficacy of Tyvaso.

UT-15C Sustained Release (Oral Treprostinil)

Pulmonary Arterial Hypertension

        We are developing a novel salt form of treprostinil, treprostinil diethanolamine for oral administration. We use technology licensed from Supernus Pharmaceuticals, Inc. (Supernus), to provide for sustained release of treprostinil in tablets. The tablet coating technology allows for treprostinil to be released into the body through an extremely small hole that is laser-drilled into the coating of each tablet. This technology releases treprostinil at a relatively even rate in the gastrointestinal tract. In 2005, a Phase I study of healthy volunteers demonstrated that the formulation and coating provided sustained blood concentrations of treprostinil for 8 to 10 hours following a single oral dose. This duration may allow for twice daily dosing. In July 2005, the EMA announced that oral treprostinil had been designated an orphan medicinal product for the treatment of PAH.

        In October 2006, we commenced two Phase III multi-national, placebo-controlled clinical trials of oral treprostinil in patients with PAH to study both safety and efficacy. The FREEDOM-C trial was a 16-week study of patients on approved background therapy using a PDE-5 inhibitor, such as Revatio, or an ERA, such as Tracleer, or a combination of both. The FREEDOM-M trial is a 12-week study of patients who are not on any background therapy. These trials have been conducted at a total of approximately 60 centers throughout the United States and the rest of the world.

        We commenced both trials using a 1 mg tablet, but during the open-label extension trial (and associated pharmacokinetic substudy) we discovered that treprostinil concentrations were higher in PAH patients than in healthy individuals due to the difference in overall absorption, metabolism and excretion of the drug between these two populations. These differences led to a number of discontinuations by patients randomized to receive drug due to tolerability-related side effects, including nausea, jaw-pain and headaches. As a result, we introduced a 0.5 mg tablet in July 2007 and a 0.25 mg tablet in April 2008 to enable more gradual dose titration (increase).

        In November 2008, we announced that the FREEDOM-C trial did not meet statistical significance for its primary endpoint.

        Analysis suggests that the inability to dose titrate was a limiting factor that suppressed the overall treatment effect. Of the 174 patients who received active drug, 25 patients discontinued due to an adverse event and 33 patients completed the trial, but were unable to titrate their doses above 1 mg twice daily. Accordingly, 58 (33%) of the patients in the active treatment group were only able to maintain a suboptimal dose of 1 mg or less twice daily. Adverse events that led to discontinuation or inability to dose-escalate included headache, nausea and vomiting. Discontinuations were most common in patients who only had access to the 1 mg tablets during the study, which was the only tablet size available when the trial began. There were no discontinuations among patients who had access to 0.25 mg tablets.

        Analysis of other secondary efficacy measures demonstrated statistically significant improvements compared to placebo.

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        Enrollment in FREEDOM-M was initially closed on October 31, 2008, with 171 patients enrolled in the trial. We believe that the results of the FREEDOM-C clinical trial, particularly as they relate to treatment effect and dosing, support our continued development of oral treprostinil. Accordingly, based on our observations from the FREEDOM-C clinical trial relating to patient tolerability and tablet strength, we submitted a protocol amendment to the FDA in February 2009 to add patients to the ongoing FREEDOM-M trial. These additional patients will be provided a lower-strength tablet (0.25 mg) when they begin the trial and their doses will be titrated in 0.25 mg increments, which we believe will improve tolerability. In addition, our amendment to the FREEDOM-M protocol specifies that the primary statistical analysis of the trial will include only those patients who started the trial using the 0.25 mg tablet. By amending the protocol for the FREEDOM-M trial we hope to achieve the following objectives: (1) to assess more accurately the effectiveness of oral treprostinil; (2) to improve patient tolerability of oral treprostinil so that an effective maintenance dose can be attained; and (3) to reduce the rate of premature discontinuation due to adverse events. We believe the results of the protocol amendment will reflect the benefits of a favorable dosing regimen for oral treprostinil. In April 2009, we began enrolling patients in FREEDOM-M under the amended protocol.

        We commenced a second Phase III clinical trial, FREEDOM-C2, to continue studying dosage and efficacy of oral treprostinil in PAH patients on an approved background therapy. Enrollment in FREEDOM-C2 began in June 2009. Currently, we do not anticipate filing an NDA for oral treprostinil before 2012.

        There are currently no approved oral prostacyclin therapies available to patients in the United States or Europe. If we are successful in developing oral treprostinil, then patients and physicians may use prostacyclin earlier in the PAH disease continuum.

Scleroderma

        We also initiated a Phase II study to investigate the effectiveness of oral treprostinil in reducing the frequency and severity of ulcers located on the fingers and toes of scleroderma patients. Enrollment of this 150- patient Phase II trial remains ongoing.

Adcirca

        We began commercial sales of Adcirca in July 2009. Adcirca is a PDE-5 inhibitor, the active pharmaceutical ingredient of which is tadalafil. Tadalafil is also the active pharmaceutical ingredient in Cialis®, which is marketed by Lilly for the treatment of erectile dysfunction. We acquired the commercial rights to Adcirca for the treatment of PAH in the U.S. from Lilly in November 2008. We sell Adcirca at a discount from an average wholesale price to pharmaceutical wholesalers. In 2009, we recognized approximately $5.8 million in Adcirca revenues, representing 2% of our net revenues. We did not recognize any revenues from Adcirca in 2008 and 2007.

        Patients with PAH have been shown to have reduced levels of the enzyme responsible for producing NO, a naturally occurring substance in the body that has the effect of relaxing vascular smooth muscle cell. Impaired blood vessel relaxation in penile tissue is also a cause of erectile dysfunction. NO works to relax pulmonary blood vessels by increasing intracellular levels of an intermediary known as cyclic GMP. Because cyclic GMP is degraded by PDE-5, an established therapeutic approach in the treatment of PAH is to use PDE-5 inhibitors to increase levels of cGMP in blood vessels and improve cardiopulmonary function in PAH patients.

        Prior to the approval of Adcirca, Revatio, which is marketed by Pfizer, was the only approved PDE-5 inhibitor for the treatment of PAH. Sildenafil, the active ingredient in Revatio, is also the active ingredient in Viagra®, which is marketed by Pfizer for the treatment of erectile dysfunction. Revatio is dosed three times daily; whereas, patients take Adcirca once daily.

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FDA Approval of Adcirca

        In May 2009, the FDA approved Adcirca, with a recommended dose of 40 mg, making it the first once-daily PDE-5 inhibitor for the treatment of PAH. Adcirca is indicated to improve exercise ability in World Health Organization Group I PAH patients, which encompasses patients with multiple forms of PAH including etiologies such as idiopathic and familial PAH as well as PAH associated with collagen vascular disease and congenital heart disease.

Commercial Rights to Adcirca

        In December 2008, we completed the transactions contemplated by several agreements we entered into with Lilly and one of its subsidiaries in November 2008, including a license agreement, a manufacturing and supply agreement and a stock purchase agreement. Pursuant to the license agreement, Lilly granted us an exclusive license for the right to develop, market, promote and commercialize Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico. Pursuant to the manufacturing and supply agreement, Lilly agreed to manufacture Adcirca and distribute it on our behalf via its wholesaler network, in the same manner that it distributes its own pharmaceutical products. In December 2008, upon closing, we made a one-time, non-refundable, non-creditable payment of $125.0 million under the manufacturing and supply agreement and a one-time payment of $25.0 million under the license agreement. Pursuant to the stock purchase agreement, Lilly purchased 6,301,674 shares of our common stock (adjusted for our September 2009 two-for-one stock split) for an aggregate purchase price of $150.0 million. We issued those shares from treasury. See Strategic Licenses and Relationships below for more details on these agreements.

Beraprost-MR

        In June 2000, we entered into an agreement with Toray Industries, Inc. (Toray) for the exclusive right to develop and market a sustained release formulation of beraprost (beraprost-SR) in the United States and Canada for the treatment of cardiovascular indications. Beraprost is a chemically stable, orally bioavailable prostacyclin analogue. Like natural prostacyclin and Remodulin, beraprost is believed to dilate blood vessels, prevent platelet aggregation and prevent proliferation of smooth muscle cells surrounding blood vessels.

        In March 2007, Lung Rx entered into an amended agreement with Toray to assume and amend the rights and obligations of our June 2000 agreement with Toray concerning the commercialization of a modified release formulation of beraprost (beraprost-MR). The amended agreement grants us additional exclusive rights to commercialize beraprost-MR in Europe and broadens the treatment indication to include vascular disease (excluding renal disease), among other revisions.

        The drug substance beraprost consists of equal amounts of four optical isomers, one of which is primarily responsible for the pharmacologic activity of the drug. As we continue clinical development, we plan to proceed with a modified release drug product containing only the most pharmacologically active isomer. As a result, future clinical trials will use the single active isomer.

        In October 2007, Toray announced that beraprost-MR received regulatory approval in Japan for use in the treatment of PAH. In July 2008, beraprost-MR was designated an orphan medicinal product by the EMA.

Aviptadil

        In February 2010, Lung Rx entered into an agreement with Mondobiotech Holding AG (Mondobiotech) for the exclusive right to develop and market aviptadil, a synthetically produced version of the naturally occurring hormone Vasoactive Intestinal Peptide (VIP), a peptide produced in the digestive system, for the treatment of PAH and other pulmonary diseases. A Phase II study of

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Aviptadil in PAH was recently completed by Mondobiotech and the EMA has designated aviptadil an orphan medicinal product for the treatment of acute lung injury and sarcoidosis.

Products to Treat Cancer

3F8 and 8H9 Antibodies

        In December 2007, we entered into two agreements with Memorial Sloan-Kettering Cancer Center (MSKCC) to license certain exclusive rights to two investigational monoclonal antibodies, 3F8 and 8H9, for the treatment of neuroblastoma and metastatic brain cancer. The monoclonal antibody 3F8 is a mouse IgG3 MAb, which is currently used in an investigational setting for the treatment of neuroblastoma, a rare cancer of the sympathetic nervous system mainly affecting children. It is the most common extracranial solid cancer in children and the most common cancer in infants. More than 400 patients have been treated with the 3F8 antibody since 1986 under investigator-initiated Investigational New Drug Applications. There are fewer than 1,000 new cases of neuroblastoma diagnosed each year. In August 2009, we began enrolling patients in a Phase II clinical trial of 3F8 for primary refractory neuroblastoma.

        The monoclonal antibody 8H9 is a mouse IgG1 MAb that is highly reactive with a range of human solid tumors, including human brain cancers. The 8H9 antibody is in early investigational development for metastases that develop in the brain from the spread of cancers from other tissues in the body. Metastatic brain cancers are ten times more common than cancers that originate in the brain, and prognosis is very poor. In the United States, more than 100,000 cases of metastatic brain cancer are diagnosed each year.

OvaRex

        In April 2002, we entered into a license agreement with AltaRex Corp., which later became AltaRex Medical Corp., a wholly-owned subsidiary of ViRexx Medical Corp. (AltaRex). Our license agreement with AltaRex provided us with certain exclusive rights to a platform of five investigational immunotherapeutic monoclonal antibodies. The lead product, OvaRex® MAb for the treatment of advanced ovarian cancer, had completed Phase II studies when we entered into the license agreement.

        In December 2007, we announced the completion of our two pivotal trials of OvaRex. Analysis of the results demonstrated that the studies failed to reach statistical significance. Based on the trial results, we decided to terminate our license agreement with AltaRex and cease further development activities with the molecules licensed thereunder.

Products to Treat Infectious Diseases—Glycobiology Antiviral Agents

        We have a license agreement with the Glycobiology Institute at the University of Oxford for the exclusive worldwide rights to certain patents relating to novel antiviral compounds. These glycobiology antiviral compounds are small molecules that may be effective as oral therapies for the treatment of hepatitis B and C infections, as well as dengue fever and certain influenza viruses. Currently, many of these compounds are undergoing laboratory testing, and new compounds are also being synthesized.

Products to Treat Diseases in Other Platforms

        In February 2010, Lung Rx entered into a Development Agreement with ImmuneWorks, Inc. (ImmuneWorks) to develop ImmuneWorks' lead compound, IW001, a purified bovine (derived from cows) Type V Collagen oral solution for the treatment of Idiopathic Pulmonary Fibrosis (IPF), a progressive lung disease characterized by abnormal and excessive deposition of fibrotic tissue in the lung, and Primary Graft Dysfunction (PGD), a type of organ rejection in patients receiving lung transplant. We expect to commence human clinical testing of IW001 in 2010. In addition to funding the

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development program, we have been granted an option to acquire all of the issued and outstanding capital stock of ImmuneWorks. In November 2009, the FDA granted IW001 orphan drug exclusivity.

Products to Provide Telemedicine Services for Cardiac Arrhythmias and Ischemic Heart Disease

CardioPAL SAVI and Decipher Recorders

        We provide telemedicine monitoring services to detect cardiac arrhythmias and ischemic heart disease through our wholly-owned subsidiary Medicomp, Inc. (Medicomp), which we acquired in December 2000. Cardiac arrhythmias and ischemic heart disease affect an estimated 20 million Americans, and possibly ten times that number worldwide. If left undetected and untreated, these conditions can result in heart attacks and death. Medicomp provides cardiac Holter monitoring (a 24-hour continuous test of heart rhythms), event monitoring (a test that typically extends to 30 days and looks for more elusive, intermittent arrhythmias) and other cardiac monitoring services remotely via telephone and the internet for hospitals, clinicians and other providers. Medicomp's services are delivered through its proprietary, miniaturized, digital Decipher Holter recorder/analyzer and its CardioPAL family of event monitors.

        In March 2005, Medicomp received FDA market clearance for a p-wave analysis in addition to its artificial intelligence algorithm that runs on all of its newly manufactured CardioPAL devices. The p-wave is a diminutive but important portion of the electrocardiograph, the analysis of which helps determine if an arrhythmia was generated from the top chambers of the heart, the atria, or from the bottom chambers of the heart, the ventricles. This level of analysis leads to more reliable, automatic detection of arrhythmias, like atrial fibrillation. In October 2009, we received FDA approval for a wireless version of our CardioPAL SAVI event monitor, which we launched in 2010.

        Holter and event services and systems are marketed to physicians, hospitals, and managed care providers directly by Medicomp's sales force. We recognized revenues of approximately $11.0 million, $9.5 million and $7.7 million from the sales of telemedicine products and services in 2009, 2008 and 2007, respectively.

Sales and Marketing

        Our marketing strategy for our Commercial Products is to use our sales and marketing teams to reach out to the prescriber community to: (1) increase PAH awareness; (2) understand the progressive nature of PAH; and (3) increase awareness of our Commercial Products and how they fit into the various stages of disease progression and treatment. The sales and marketing team consisted of approximately 70 employees as of December 31, 2009. We anticipate growth in our sales force in the near-term as we position our business for further expansion. We divide our domestic sales force into two teams. One sales team is primarily responsible for medical practice accounts that are historically large Remodulin prescribers. The other sales team is primarily responsible for medical practice accounts that have not historically been large prescribers of Remodulin. The efforts of our sales and marketing teams are supplemented by our specialty pharmaceutical distributors. For additional information about our agreements with our distributors, see Domestic Distribution of Commercial Products. Our distributors are experienced in all aspects of using and administering chronic therapies, as well as patient care, the sale and distribution of these medicines and reimbursement from insurance companies and other payers. Outside of the United States, we have entered into exclusive distribution agreements covering most of Europe, South America, Israel, and parts of Asia. Sales in Canada are currently conducted under the management of our wholly-owned subsidiary, Unither Biotech Inc., through a national specialty pharmaceutical wholesaler. We are working with our current distributors to expand Remodulin sales into other countries in which they have distribution rights.

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Domestic Distribution of Commercial Products

Remodulin and Tyvaso

        We have entered into separate, non-exclusive distribution agreements with CuraScript, Inc. (CuraScript), Accredo Health Group, Inc. (Accredo), and CVS Caremark (Caremark), our specialty pharmaceutical distributors in the United States, to market, promote and distribute both Remodulin and Tyvaso. Our Remodulin distribution agreements with Accredo and Caremark include automatic term renewals for additional one-year periods subject to notice of termination. Our Remodulin distribution agreement with Curascript contains two-year term renewal periods. We entered into our distribution agreements for Tyvaso in August 2009. Our Tyvaso distribution agreements have one-year terms and renew automatically for additional one-year periods, unless terminated earlier. We update our distribution agreements from time to time to reflect changes in the regulatory environment. Such changes have not had a significant impact on our operations or our relationships with our distributors, and tend to occur in the ordinary course of business. We compensate our distributors on a fee-for-service basis as set forth in our distribution agreements. If any of our distribution agreements expire or terminate, we may, under certain circumstances, be required to repurchase any unsold Remodulin or Tyvaso inventory held by our distributors. None of our current agreements grants our distributors the distribution rights for oral treprostinil in the United States.

        Our specialty pharmaceutical distributors are responsible for assisting patients with obtaining reimbursement for the cost of Remodulin and Tyvaso and providing other support services. Under our distribution agreements, we sell Remodulin and Tyvaso to our distributors at a discount from an average wholesale price recommended by us. We have also established a patient assistance program in the United States, which provides eligible uninsured or underinsured patients with Remodulin and Tyvaso at no charge for a certain period of time.

        In January 2010, we notified Accredo, CuraScript and Caremark of our intention to increase the price of Remodulin for all concentrations by 9.6 percent effective March 25, 2010. This is only the second time since the launch of Remodulin that we have initiated an across-the-board increase in its price. The last such increase was in mid-2006 and we increased the price by 3.4 percent. Our Remodulin distribution agreements do not allow our distributors to preorder inventory prior to a price increase. We are currently analyzing the impact of this price increase on our business.

Adcirca

        We sell Adcirca at a discount from an average wholesale price to pharmaceutical wholesalers. Under our manufacturing and supply agreement with Lilly, (see Strategic Licenses and Relationships below for more details), Lilly has agreed to manufacture Adcirca and distribute it via its wholesaler network, which includes our specialty pharmaceutical distributors, in the same manner that it distributes its own pharmaceutical products. Under the terms of this agreement, we take title to Adcirca upon completion of its manufacture by Lilly. Adcirca is shipped to customers, generally pharmaceutical wholesalers, in accordance with purchase orders received by Lilly. When customers take delivery of Adcirca, Lilly sends an invoice and collects the amount due from the customer subject to customary discounts and rebates, if any. Although Lilly provides these services on our behalf, we maintain the risk of loss as it pertains to inventory and non-payment of invoices. The manufacturing and supply agreement will continue in effect until expiration or termination of the license agreement.

International Distribution of Remodulin

        We currently sell subcutaneous and intravenous Remodulin to six distributors who have exclusive distribution rights in certain EU member countries, and other non-EU countries, such as South America, Israel and parts of Asia. In some of the European markets where we are not licensed, we sell (but do not market) Remodulin under the named-patient system in which therapies are approved for

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individual patients by a national medical review board on a case-by-case basis. We are working on expanding our sales of subcutaneous and intravenous Remodulin into new territories outside of the United States through our existing distributors and by creating relationships with new distributors. In March 2007, we entered into a distribution agreement with Mochida Pharmaceutical Co., Ltd. (Mochida) to obtain approval and exclusively distribute subcutaneous and intravenous Remodulin in Japan. In addition, Grupo Ferrer Internacional, S.A. (Grupo Ferrer) has been actively working toward commencing commercial sales of Remodulin in Taiwan and South Korea. However, certain countries, like Japan, may require that new clinical trials, called bridging studies, be conducted in order to demonstrate the efficacy and safety of a drug in their patient population prior to approval. Commercial sales in such countries could therefore be several years from realization.

        During the first half of 2010, we expect to notify our international distributors of our intention to increase the transfer price of Remodulin for all concentrations, as we have already done for our U.S.-based specialty pharmaceutical distributors.

Strategic Licenses and Relationships

Lilly Agreements Related to Adcirca

        In December 2008, we completed the transactions contemplated by several agreements we entered into in November 2008 with Lilly, including a license agreement, a manufacturing and supply agreement, and a stock purchase agreement.

        License Agreement.    Under the terms of the license agreement, which is more fully described in Lilly License, Lilly granted us an exclusive license for the right to develop, market, promote and commercialize Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico.

        If in the future Lilly seeks to grant rights to a third party to develop or commercialize Adcirca for the treatment of pulmonary hypertension in any other country (excluding Japan), the license agreement provides that we will have a right of first negotiation to acquire those rights.

        The license agreement will continue in effect until the later of: (1) expiration, lapse, cancellation, abandonment or invalidation of the last claim to expire within a Lilly patent covering the commercialization of Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico; or (2) expiration of any government-conferred exclusivity rights to use Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico.

        We have the right to terminate the license agreement upon six months written notice to Lilly. Either party may terminate the license agreement upon a material breach by the other party of it or the manufacturing and supply agreement, described below.

        Manufacturing and Supply Agreement.    Under the terms of the manufacturing and supply agreement, Lilly has agreed to manufacture Adcirca and distribute it on our behalf via its pharmaceutical wholesaler network, in the same manner that it distributes its own pharmaceutical products. Under the terms of this agreement, we will take title to Adcirca upon its manufacture by Lilly. Adcirca will be shipped to customers, generally pharmaceutical wholesalers, in accordance with customers' purchase orders received by Lilly. Lilly invoices and collects the invoice amount due from the customer subject to customary discounts and rebates, if any, and remit the collections to us. Although Lilly is providing these services on our behalf, we maintain the risk of loss as it pertains to inventory and nonpayment of sales invoices. The manufacturing and supply agreement will continue in effect until expiration or termination of the license agreement.

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        As consideration for Lilly's agreement to manufacture and supply Adcirca, we made a one-time payment to Lilly of $125.0 million in December 2008, which was expensed. We also agreed to purchase Adcirca at a fixed cost. The agreement provides a mechanism, generally related to the increase in the national cost of pharmaceutical manufacturing, in which Lilly may raise our acquisition cost of Adcirca.

        Stock Purchase Agreement.    Under the terms of the stock purchase agreement, on December 18, 2008, we issued 6,301,674 shares of our common stock to Lilly from treasury for an aggregate purchase price of $150.0 million, representing approximately 13.6% of the then-current outstanding shares of our common stock. The shares were issued at a price of $23.805 per share (adjusted for our September 2009 stock split), representing 90% of the average closing price of our common stock for the five trading days commencing on and including November 17, 2008. The weighted average acquisition price of the treasury stock issued was $26.02 per share. The excess of the acquisition cost of the treasury stock above the price paid by Lilly for the shares was approximately $14.2 million and has been included in our accumulated deficit.

Toray Amended License Agreement

        In June 2000, we licensed from Toray the exclusive right to develop and market in the United States and Canada beraprost-SR, a chemically stable oral prostacyclin analogue in a sustained release formulation, for the treatment of cardiovascular indications. In March 2007, Lung Rx entered into an amended agreement with Toray to assume and amend the rights and obligations of our June 2000 agreement concerning the commercialization of beraprost-MR, a modified release formulation of beraprost. The amended agreement grants us additional exclusive rights to commercialize beraprost-MR in Europe and broadens the indication to vascular disease (excluding renal disease), among other revisions.

        In accordance with the terms of the amended agreement, in March 2007 we issued 400,000 shares of our common stock to Toray in exchange for the cancellation of Toray's existing right under the original agreement to receive an option grant to purchase 1,000,000 shares of our common stock (the Option Grant). Under the terms of the amended agreement, Toray has the right to request that we repurchase the 400,000 shares of our common stock upon 30 days prior written notice at the price of $27.205 per share (share based numbers and prices are adjusted for our September 2009 two-for-one stock split), which was the average closing price of our common stock between January 11, 2007, and February 23, 2007. Based on the average closing price of our common stock for the two trading days prior to and the two trading days after the effective date of the amended agreement (March 16, 2007), we recognized a research and development expense of approximately $11.0 million related to the issuance of these shares, because beraprost-MR had not yet obtained regulatory approval for commercial sales. In accordance with the provisions of FASB ASC 85, Derivatives Hedging, and Accounting Series Release No. 268, Presentation in Financial Statements of Redeemable Preferred Stocks these shares of our common stock are reflected in mezzanine equity as common stock subject to repurchase valued at the repurchase price. If Toray requests that we repurchase these shares, then an amount equal to the repurchase price will be transferred to a liability account until the repurchase is completed.

        The amended agreement also specifies that we make certain milestone payments to Toray during the development period and upon U.S. or EU regulatory approval. Upon execution of the amended agreement, we made a $3.0 million payment to Toray in addition to the issuance of the shares of our common stock discussed above. Additional annual milestone payments of $2.0 million are specified in the amended agreement and commenced in the first quarter of 2008, increasing annually in $1.0 million increments through 2011. These payments are expensed when incurred. These payments are contingent upon the receipt of clinical trial material and commercial drug from Toray that meet all regulatory standards and requirements, including those relating to chemistry, manufacturing and controls, and are documented to the satisfaction of U.S. and EU regulatory authorities. In addition, if Toray elects to

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terminate production of beraprost-MR, no further payments would be due under the amended agreement. Conversely, if we elect to terminate development of beraprost-MR, then all remaining milestone payments would be due to Toray, unless certain regulatory standards and requirements have not been met, or if material problems have been identified with respect to manufacturing and regulatory compliance.

NEBU-TEC Agreement of Sale and Transfer

        In December 2008, our wholly-owned German subsidiary, Unither Therapeutik GmbH, entered into an Agreement of Sale and Transfer with NEBU-TEC, under which NEBU-TEC agreed to sell us its line of business to manufacture the Tyvaso Inhalation System and all related assets and rights for €5.0 million plus future consideration of up to €10.0 million depending on the occurrence of specific events, generally €1.0 million for each 1,000 patients cumulatively using the Tyvaso Inhalation System. We have the right of first refusal to acquire NEBU-TEC's next generation inhalation device, the SIM-Neb, which is currently under development. Upon signing the agreement, we paid NEBU-TEC €2.5 million.

        Prior to the closing of the Agreement of Sale and Transfer, we had in place a Clinical and Commercial Supply Agreement with NEBU-TEC, which provided for the availability of nebulizers and related supplies for use in our TRIUMPH-1 clinical trial of inhaled treprostinil. These non-exclusive agreements required NEBU-TEC to sell us devices and supplies for clinical and commercial use at specified prices and payment terms. These agreements also set forth each party's obligations with respect to regulatory approvals.

        Closing and transfer of the related assets and rights occurred in September 2009 after we received FDA approval for Tyvaso. At closing, we paid NEBU-TEC an additional €2.5 million. During the interim period prior to the closing of the Agreement of Sale and Transfer, both NEBU-TEC and we remained subject to the existing Clinical and Commercial Supply Agreements, as amended. Under the terms of the Agreement of Sale and Transfer, we purchase the device components and manage the manufacturing process for the Tyvaso Inhalation System; however, NEBU-TEC supplies the labor to assemble the devices at cost plus 10 percent.

Mondobiotech License Agreement

        In February 2010, Lung Rx entered into an agreement with Mondobiotech for the exclusive right to develop and market aviptadil, a synthetically produced version of the naturally occurring hormone VIP, a peptide produced in the digestive system, for the treatment of PAH and other pulmonary diseases. A Phase II study of Aviptadil in PAH was recently completed by Mondobiotech and the EMA has designated aviptadil an orphan medicinal product for the treatment of acute lung injury and sarcoidosis.

ImmuneWorks License Agreement

        In February 2010, Lung Rx entered into a Development Agreement with ImmuneWorks to pursue development of ImmuneWorks' lead compound, IW001, a purified bovine (derived from cows) Type V Collagen oral solution for the treatment of IPF and PGD in patients receiving lung transplant. We expect to commence human clinical testing of IW001 in 2010. In addition to funding the development program, we have been granted an option to acquire all of the issued and outstanding capital stock of ImmuneWorks. In November 2009, the FDA granted IW001 orphan drug exclusivity.

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Patents and Proprietary Rights

        Our success depends in part on our ability to obtain and maintain patent protection for our products, preserve trade secrets, prevent third parties from infringing upon our proprietary rights and operate without infringing upon the proprietary rights of others in the United States and worldwide.

Glaxo Assignment

        In January 1997, GlaxoSmithKline PLC (formerly Glaxo Wellcome, Inc) (Glaxo) assigned to us all rights to the use of the stable prostacyclin analogue now known as treprostinil, the active ingredient in Remodulin, Tyvaso and our oral treprostinil tablet. The patent covering the use of treprostinil for PAH expires in the United States in October 2014 (as extended—see Patent Term Extensions below) and on various dates from May 2011 to June 2014 in three other countries.

Pfizer, Inc. (Pfizer) License

        In December 1996, Pharmacia & Upjohn Company (now Pfizer) exclusively licensed to us certain patents, a patent application and know-how for the composition and production of treprostinil. We filed our own United States patent application for a new synthesis and production method for treprostinil in October 1997, and the patent was granted in August 2002. Two additional patents covering this synthesis and production method were granted in March 2003 and August 2004. We believe that our method of synthesis is a substantial improvement over the Pharmacia method and we are using our unique synthesis method rather than the licensed Pharmacia method for the production of treprostinil. We have additional registered and pending patents relating to other methods of synthesizing treprostinil.

Lilly License

        In November 2008, we entered into a license agreement with Lilly pursuant to which Lilly granted us the exclusive right to develop, market, promote and commercialize Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico.

        In exchange for the license, we paid Lilly a one-time fee of $25.0 million in December 2008, which was expensed since Adcirca has not yet received regulatory approval for commercial sales. We also agreed to pay Lilly royalties equal to 5 percent of our net sales of Adcirca in the United States and Puerto Rico, as a pass through of Lilly's third-party royalty obligations, for so long as Lilly required to make such payments.

        Lilly retained the exclusive rights to develop, manufacture and commercialize pharmaceutical products containing tadalafil, the active pharmaceutical ingredient in Adcirca, for the treatment of pulmonary hypertension outside of the United States and Puerto Rico and for the treatment of other diseases worldwide. Lilly will retain authority for all regulatory activities with respect to Adcirca, including retail pricing, which is expected to be a price parity with Cialis, Lilly's therapy for the treatment of erectile dysfuction, the active ingredient of which is also tadalafil.

        If in the future Lilly seeks to grant rights to a third party to develop or commercialize Adcirca for the treatment of pulmonary hypertension in any other country (excluding Japan), the license agreement provides that we will have a right of first negotiation to acquire those rights.

        The license agreement will continue in effect until the later of: (1) expiration, lapse, cancellation, abandonment or invalidation of the last claim to expire within a Lilly paten covering the commercialization of Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico; or (2) expiration of any government-conferred exclusivity rights to use Adcirca for the treatment of pulmonary hypertension in the United States and Puerto Rico.

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        We have the right to terminate the license agreement upon six months written notice to Lilly. Either party may terminate the license agreement upon a material breach by the other party of it or the manufacturing and supply agreement, described above.

Supernus Pharmaceutical License

        In June 2006, we entered into an exclusive license agreement with Supernus to use certain of its technologies in our sustained release oral treprostinil diethanolamine tablet. Under the agreement, in return for the license, we will pay Supernus certain amounts upon the achievement of specified milestones based on the development of oral treprostinil and its commercial launch. In addition, the agreement provides that we will pay a royalty to Supernus based on net worldwide sales of the initial product. Any such royalty will be paid for approximately twelve years commencing with the first product sale and is subject to adjustments as specified in the agreement. Additional milestone payments and royalty payments may be due for the development and commercialization of other products developed using the technology granted under this license.

Memorial Sloan Kettering License

        In December 2007, we entered into two agreements with MSKCC to exclusively license certain rights to two investigational monoclonal antibodies, 3F8 and 8H9, for the treatment of neuroblastoma and metastatic brain cancer. The monoclonal antibody 3F8 is a mouse IgG3 MAb, which is currently used in an investigational setting for the treatment of neuroblastoma, a rare cancer of the sympathetic nervous system mainly affecting children. 8H9 is also a mouse monoclonal antibody, but of the IgG1 subclass. The 8H9 antibody is highly reactive with a range of human solid tumors, including brain cancers. The 8H9 antibody is in early investigational development for metastatic brain cancer.

        Under the terms of the agreements, MSKCC granted us an exclusive license for the development and commercialization of the 3F8 and 8H9 antibodies for cancer throughout the universe. In exchange for these exclusive licenses, we agreed to pay a royalty fee on net sales, with an annual minimum royalty payment for each antibody. Milestone payments may also be due for the development and commercialization of these antibodies under our licenses.

Patent Term Extensions

        In February 2005, we were granted a five-year patent term extension by the United States Patent and Trademark Office for a patent covering the method of treating PAH using Remodulin and Tyvaso. U.S. Patent Number 5,153,222, entitled "Method of Treating Pulmonary Hypertension with Benzidine Prostaglandins", was originally scheduled to expire on October 6, 2009. It will now expire on October 6, 2014. The five-year Hatch-Waxman Act extension is the maximum extension allowed under 35 U.S.C. §156. Additional patents covering other products to which we have rights may also be eligible for extensions of up to five years based upon patent term restoration procedures under the Hatch-Waxman Act in the United States, and under similar procedures in Europe.

Research & Development Expenditures

        We are engaged in research and development and have incurred substantial expenses for these activities. These expenses generally include the cost of acquiring or inventing new technologies and products, as well as new product development. Research and development expenses during 2009, 2008 and 2007 totaled approximately $122.2 million, $239.2 million and $83.4 million, respectively. See Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Major Research and Development Projects for additional information regarding expenditures related to major research and development projects.

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Manufacturing and Supply

        We make treprostinil, the active ingredient for Remodulin and Tyvaso, and treprostinil diethanolamine, the active ingredient for oral treprostinil, at our laboratory facility in Silver Spring, Maryland. Until March 2007, we made treprostinil at our Chicago, Illinois facility. In June 2009, the FDA approved our Silver Spring facility for commercial manufacturing of treprostinil. In November 2009, we also received European regulatory approval to manufacture treprostinil in our Silver Spring facility.

        With the transfer of our manufacturing operations to our Silver Spring facility, we have also changed our internal manufacturing process. It is more cost effective for us to purchase the advanced intermediate compounds we use to manufacture treprostinil from several third-party vendors. Our planned manufacturing process has been designed to give us the flexibility to produce both treprostinil diethanolamine (the form of treprostinil used in our oral tablet) and treprostinil (used to produce Remodulin and Tyvaso) efficiently in proportion to forecasted demand.

        Baxter Healthcare Corporation (Baxter) manufactures Remodulin for us. The initial term of our agreement with Baxter ended in October 2004, but the agreement automatically renews for successive eighteen-month terms unless earlier terminated by either party. In April 2009, we amended our agreement with Baxter to extend it through 2013. In addition, we agreed that Remodulin will be manufactured using a different set of equipment and in larger quantities than the current manufacturing process. Since Baxter will make Remodulin on different equipment and in a larger production batch than the current process, we are required to have the new equipment and process approved by the FDA. We are currently conducting the validation testing for the new equipment and process. If the validation testing is successful, we anticipate filing for FDA approval of the new equipment and process in the second half of 2010. Baxter continues to manufacture Remodulin for us according to the process currently approved by the FDA.

        We eventually intend to primarily manufacture Remodulin and Tyvaso in our new combination office and laboratory facility in Silver Spring, Maryland. Also, although we maintain a three-year inventory of Remodulin and Tyvaso, based on expected demand, we believe that having third parties approved to manufacture these products will mitigate some of our manufacturing risks, including the risk that we might not be able to produce sufficient quantities to meet patient demand.

        We rely on Catalent Pharma Solutions, Inc. (formerly Cardinal Health, Inc.) (Catalent) to do the following: (1) conduct stability studies on Remodulin, (2) manufacture Tyvaso, (3) serve as a backup manufacturer for oral treprostinil, and (4) analyze other products we develop. We have begun manufacturing oral treprostinil tablets in our manufacturing facility in Research Triangle Park, North Carolina.

        The nebulizer used in our Tyvaso Inhalation System is manufactured by us through Unither Therapeutik GmbH. While we purchase the components and manage the manufacturing process, NEBU-TEC supplies all the labor to manufacture the nebulizers.

        In 2010, we anticipate commencing development of the 3F8 and 8H9 antibodies licensed from MSKCC at our Silver Spring facility. We expect that we will be able to utilize much of the equipment that we obtained for a previous project for 3F8 and 8H9 antibody development.

        Our telemedicine products are currently manufactured by Winland Electronics, Inc.

        Although we believe that other manufacturers and suppliers could provide similar products, services and materials, there are few companies that could replace these manufacturers and suppliers. A change in supplier or manufacturer could cause a delay in the manufacture, distribution and research efforts associated with our respective products or result in increased costs. See also Item 1A—Risk Factors included in this Annual Report on Form 10-K.

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Competition

        Many drug companies engage in research and development to commercialize products to treat cardiovascular and infectious diseases and cancer. For the treatment of PAH, we compete with many approved products in the United States and the rest of the world, including the following:

•

Flolan. The first product approved by the FDA for treating PAH, Flolan, also known as epoprostenol, is a prostacyclin that is delivered by intravenous infusion. Glaxo began marketing Flolan in the United States in 1996. In 2006, Myogen, Inc. (Myogen) acquired the marketing rights from Glaxo for Flolan in the United States. In November 2006, Myogen was acquired by Gilead Sciences, Inc. (Gilead). In 2009, Gilead returned the rights to Flolan to Glaxo. The generic exclusivity period for Flolan expired in April 2007;



•

Generic epoprostenol. In April 2008, Teva Pharmaceuticals Industries Ltd. (Teva) announced that the FDA approved its version of generic epoprostenol for the treatment of PAH. This is the first approved generic version of Flolan. In June 2008, GeneraMedix Inc. (GeneraMedix) received FDA approval for its version of epoprostenol, which is stable at room temperature. In February 2009, Actelion announced that it had entered into an agreement with GeneraMedix to acquire its epoprostenol product and expects to begin commercial sales of this product in the first half of 2010;



•

Ventavis. Approved in December 2004 in the United States and in September 2003 in Europe, Ventavis is an inhaled prostacyclin analogue. Ventavis was initially marketed by CoTherix, Inc. (CoTherix) in the United States and is marketed by Bayer Schering Pharma AG in Europe as Iloprost. In January 2007, CoTherix was acquired by Actelion, the manufacturer and distributor of Tracleer and distributor of GeneraMedix's epoprostenol product;



•

Tracleer. The first oral drug to be approved for PAH, Tracleer is also the first drug in its class, known as endothelin receptor antagonists (ETRAs). Tracleer was approved in December 2001 in the United States and in May 2002 in Europe. Tracleer is marketed worldwide by Actelion;



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Revatio. Approved in June 2005 in the United States, Revatio is also an oral therapy and is marketed by Pfizer Inc. Revatio contains sildenafil, the same active ingredient as Viagra, and is the first PDE-5 inhibitor to be approved for PAH;



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Letairis™. Approved in June 2007 in the United States, Letairis is an oral therapy marketed by Gilead for the treatment of PAH. Like Tracleer, Letairis is an ETRA. In April 2008, Glaxo received marketing authorization from the EMA for Letairis in Europe where it is known as Volibris®; and



•

Thelin®. Approved in August 2006 in the EU, Thelin is an oral therapy, which was developed and initially marketed in Europe by Encysive Pharmaceuticals Inc. (Encysive), for the treatment of PAH. Like Tracleer and Letairis, Thelin is an ETRA. In June 2008, Pfizer completed its acquisition of Encysive. Pfizer has stated that it plans to conduct a pivotal Phase III clinical trial to support registration of Thelin in the United States and eventually seek FDA approval.

        Due to their ease of use, oral therapies, such as Adcirca, Revatio and Tracleer, are generally considered first-line therapies for newly diagnosed NYHA Class II PAH patients. Inhaled therapies like Tyvaso and Ventavis are generally used in NYHA Class III patients during the middle stages of the PAH disease treatment cycle. Flolan and Remodulin, more complex infusion therapies, are generally considered later-stage therapies for NYHA Class IV patients. The use of the available oral therapies and Tyvaso, either alone or in combination, will delay the need for infusion therapy for many patients. As a result, the success of other therapies in preventing disease progression affects our commercial operations. Furthermore, the commercialization of generic forms of other approved PAH therapies may exert downward pressure on the pricing of our products. For further discussion on this risk, see

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Item 1A—Risk Factors—We may not compete successfully with established and newly developed drugs or products, or the companies that develop and market them.

        Holter and event monitoring analysis services and systems are provided by many local and regional competitors and a few national competitors.

        We compete with all of these products for customers, funding, access to licenses, personnel, third-party collaborators, product development and commercialization. Almost all of these companies have substantially greater financial, marketing, sales, distribution and technical resources, and more experience in research and development, product development and marketing, clinical trials and regulatory matters, than we have.

Governmental Regulation

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

•

Preclinical laboratory tests, preclinical studies in animals, formulation studies and the submission to the FDA of an IND for a new drug;



•

Clinical studies in healthy volunteers;



•

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



•

Clinical studies in patients to explore safety, efficacy and dose-response characteristics;



•

The submission of an NDA to the FDA; and



•

FDA review and approval of the NDA prior to any commercial sale or shipment of the drug.

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

        Clinical trials in support of an NDA are typically conducted in three sequential phases, but the phases may overlap. During Phase I, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess its effects on bodily functions and safety, including side effects associated with increasing doses. Phase II usually involves studies in a limited patient population to:

•

assess the efficacy of the drug in specific, targeted indications;



•

assess tolerance and optimal dosage; and



•

identify possible adverse effects and safety risks.

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

        After successful completion of the required clinical testing, an NDA or a Biologics License Application is typically submitted to the FDA in the United States, and an MAA is typically submitted to the EMA in the EU. The regulatory authorities may request additional information before accepting an application, in which case the application must be resubmitted with the additional information. Once the application has been accepted, the regulatory authority reviews the application and responds to the applicant. The review process is often significantly extended by requests from regulatory authorities for additional information or clarification. In the United States, the FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether it should be approved. The FDA is not bound by the recommendation of an advisory committee. The regulatory authorities may also inspect the manufacturing facility before approving an application.

        In the United States, if FDA evaluations of the application and the manufacturing facilities are favorable, the FDA may issue either an approval letter or a complete response letter. A complete response letter will usually contain a number of conditions that must be met in order to secure final approval of the application and authorization of commercial marketing of the drug for certain indications.

        At the request of an applicant, the FDA may designate a product as an "orphan drug" in the United States if the drug is intended to treat an orphan, or rare, disease or condition. A disease or condition is considered orphan if it affects fewer than 200,000 people in the United States. If an applicant obtains the first FDA marketing approval for a certain orphan drug, the applicant will have a seven-year exclusive right against generic versions to market the drug for the orphan indication. The FDA granted orphan designation for the active ingredient treprostinil for the treatment of PAH as a continuous infusion. However, this designation does not preclude us from seeking orphan drug designation for other formulations or routes of administration, such as oral or inhaled, of treprostinil to treat PAH, or for treprostinil used to treat other orphan diseases. In order for the FDA to grant orphan drug designation for other formulations or routes of administration of treprostinil to treat PAH, we must demonstrate that such new formulation or route of administration is clinically superior to the formulation or route of administration previously granted orphan designation.

        The Hatch-Waxman Act provides that patent terms may be extended to compensate for some of the patent life that is lost during the FDA regulatory review period for a product. This extension period would generally be one-half the time between the effective date of an IND and the submission date of an NDA, plus all of the time between the submission date of an NDA and its approval, subject to a maximum extension of five years. Similar patent term extensions are available under European laws. Following FDA approval, we filed a patent term extension application with the United States Patent and Trademark Office for our patent covering the method of treating PAH using Remodulin. The application was approved in February 2005 with the maximum patent term extension of five years, and the patent will expire on October 6, 2014.

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

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        In the EU, marketing authorizations may be submitted through a centralized body or through a decentralized or a national level process. The centralized procedure is mandatory for the approval of biotechnology products, high technology products and orphan products and is available at the applicant's option for other products. The centralized procedure provides for the grant of a single marketing authorization that is valid in all EU member countries. The decentralized procedure is available for all medicinal products that are not subject to the centralized procedure. The decentralized procedure provides for mutual recognition of national approval decisions, changes existing procedures for national approvals and establishes procedures for coordinated EU actions on products, suspensions and withdrawals. Under this procedure, the holder of a national marketing authorization for which mutual recognition is sought may submit an application to one or more EU member countries, certify that the dossier is identical to that on which the first approval was based, or explain any differences and certify that identical dossiers are being submitted to all EU member countries for which recognition is sought. Within 90 days of receiving the application and assessment report, each EU member country must decide whether to recognize approval. The procedure encourages member states to work with applicants and other regulatory authorities to resolve disputes concerning mutual recognition. Lack of objection of a given country within 90 days automatically results in approval in that country. Following receipt of marketing authorization in an EU member country, the applicant is then required to engage in pricing discussions and negotiations with a separate prescription pricing authority in that country. Commercial sales are only able to commence in a country once pricing approval has been received.

        To secure European regulatory approvals for subcutaneous Remodulin for PAH, we used the mutual recognition process. Under the rules then applicable, centralized filing was not required and we perceived the decentralized procedure to be the most effective means for approval. We filed our first MAA in France in February 2001. Review of our application was completed in 2005. As a result, Remodulin was approved in 23 member countries of the EU under the mutual recognition process described above. We withdrew applications in Spain, the United Kingdom and Ireland with the intent of resubmitting some or all of the applications when we filed for approval for intravenous Remodulin since these countries required additional information not required by the other European countries.

        To secure European regulatory approval for Tyvaso, we submitted an MAA to the EMA via the centralized process in December 2008. Regulations in Europe have changed since we made our initial filing for Remodulin and all therapies for orphan diseases must now use the centralized process. In February 2010, we withdrew our MAA from consideration by the EMA due to the EMA's major objection related to findings of non-compliance with good clinical practice (GCP) at two clinical sites. The EMA stated that these findings would preclude a recommendation for approval of Tyvaso in the EU. The EMA had no major objections at the time of withdrawal related to the safety or efficacy of Tyvaso.

        To secure approval of the Tyvaso Inhalation System in the United States, applicable regulations require a quality system for the design, manufacture, packaging, labeling, storage, installation and servicing of devices intended for commercial distribution. These quality system regulations require that various specifications and controls be established for devices, devices be designed under a quality system to meet these specifications, devices be manufactured under a quality system, finished devices meet these specifications, devices be correctly installed, checked and serviced, quality data be analyzed to identify and correct quality problems, and complaints be processed. Regulatory authorities may also require additional patient data to support approval for these devices. We are also subject to inspections by regulatory agencies and ensuring that we meet all requirements during inspections.

        To continue marketing our products after approval, applicable regulations require us to maintain a positive risk-benefit profile, maintaining regulatory applications through periodic reports to regulatory authorities, fulfilling pharmacovigilance requirements, maintaining manufacturing facilities according to the FDA's current Good Manufacturing Practices requirements, and successfully completing regulatory

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agency inspections, among other requirements. Our manufacturing facilities are subject to continual review and periodic inspections.

        Our telemedicine products are manufactured at contract facilities that are regulated by the FDA under different laws and regulations that apply to medical devices. The telemedicine devices designed and sold by Medicomp have received marketing clearance from the FDA under Section 510(k) of the Food, Drug and Cosmetic Act. Medical devices are required to be manufactured in conformance with the FDA's Quality System Regulations.

        In the United States, many independent third-party payers, as well as the Medicare and State Medicaid programs, reimburse our Commercial Products. Medicare is the federal program that provides health care benefits to senior citizens and certain disabled and chronically ill persons. Medicaid is the federal program administered by the states to provide health care benefits to certain indigent persons. The Medicare contractors who administer the program provide reimbursement for our pharmaceutical Commercial Products at a rate generally equal to 95% of the published average wholesale price as of October 1, 2003 (the Medicare Part B payment formula for drugs infused through durable medical equipment) or 106% of Average Sales Price (the Medicare Part B payment formula for drugs inhaled through durable medical equipment). The State Medicaid programs also generally provide reimbursement for our Commercial Products, at reimbursement rates that are below the published average wholesale price and that vary from state to state. In return for including our pharmaceutical Commercial Products in the Medicare and Medicaid programs, we have agreed to pay a rebate to State Medicaid agencies that provide reimbursement for those products. We have also agreed to sell our Commercial Products under contracts with the Veterans Administration, Department of Defense, Public Health Service and numerous other federal agencies as well as certain hospitals that are designated as 340B entities (entities designated by federal programs to receive drugs at discounted prices) at prices that are significantly below the price we charge to our specialty pharmaceutical distributors. These programs and contracts are highly regulated and impose restrictions on our business. Failure to comply with these regulations and restrictions could result in a loss of our ability to continue receiving reimbursement for Remodulin. We estimate that between 35-50% of Remodulin and Tyvaso sales in the United States are reimbursed under the Medicare and Medicaid programs.

Employees

        We had 410 employees as of January 5, 2010. We also maintain active independent contractor relationships with various individuals, most of whom have month-to-month or annual consulting agreements. We believe our employee relations are excellent.

Industry Segments and Geographic Areas

        We operate two business segments: pharmaceuticals and telemedicine. We sell our products in the United States and throughout the rest of the world. The information required by Item 101(b) and 101(d) of Regulation S-K relating to financial information about industry segments and geographical areas, respectively, is contained in Note 19 of the consolidated financial statements included in this Annual Report on Form 10-K.

Corporate Website

        Our Internet website address is http://www.unither.com. Our filings on Form 10-K, Form 10-Q, Form 3, Form 4, Form 5, Form 8-K and any and all amendments thereto are available free of charge through this internet website as soon as reasonably practicable after they are filed or furnished to the Securities and Exchange Commission (SEC). They are also available through the SEC at http://www.sec.gov/edgar/searchedgar/companysearch.html.

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EXECUTIVE OFFICERS OF THE REGISTRANT

        The following is a list, as of February 1, 2010, setting forth certain information regarding our executive officers. Each executive officer holds office until the first meeting of the Board of Directors after the annual meeting of shareholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Each executive officer's employment will end pursuant to the terms of his or her employment contract. Each of the employment contracts generally provides for an initial term of service of five years, which five-year term may be renewed after each year for additional one-year periods.

        Martine A. Rothblatt, Ph.D., J.D., M.B.A., started United Therapeutics in 1996 and has served as Chairman and Chief Executive Officer since its inception. Prior to United Therapeutics, she created and served as Chairman and CEO of Sirius Satellite Radio. She also led the International Bar Association's efforts to present the United Nations with a draft Human Genome Treaty. Her book, YOUR LIFE OR MINE: HOW GEOETHICS CAN RESOLVE THE CONFLICT BETWEEN PUBLIC AND PRIVATE INTERESTS IN XENOTRANSPLANTATION, was published by Ashgate in 2004. She is a co-inventor on three of our patents pertaining to treprostinil.

        Roger Jeffs, Ph.D., joined United Therapeutics in September 1998 as Director of Research, Development and Medical. Dr. Jeffs was promoted to Vice President of Research, Development and Medical in July 2000 and to President and Chief Operating Officer in January 2001. Prior to 1998, Dr. Jeffs worked at Amgen, Inc. as Manager of Clinical Affairs and Associate Director of Clinical Research from 1995 to 1998, where he served as the worldwide clinical leader of the Infectious Disease Program.

        John M. Ferrari joined United Therapeutics in May 2001 as Controller. Mr. Ferrari was promoted to Vice President of Finance in December 2003 and to Vice President of Finance and Treasurer in June 2004. In August 2006, Mr. Ferrari was promoted to Chief Financial Officer and Treasurer. Prior to joining United Therapeutics, Mr. Ferrari served as Controller for Blackboard, Inc., from 1998 to 2001. Prior to his employment with Blackboard, Inc., Mr. Ferrari served in various senior financial management positions since beginning his accounting career in 1984.

        Paul A. Mahon, J.D., has served as General Counsel and Corporate Secretary of United Therapeutics since its inception in 1996. In June 2001, Mr. Mahon joined United Therapeutics full-time as Senior Vice President, General Counsel and Corporate Secretary. In November 2003, Mr. Mahon was promoted to Executive Vice President for Strategic Planning, General Counsel and Corporate Secretary. Prior to June 2001, he served United Therapeutics, beginning with its formation in 1996, in his capacity as principal and managing partner of a law firm specializing in technology and media law.

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ITEM 1A.    RISK FACTORS

Forward-Looking Statements

        This Annual Report on Form 10-K 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 are based on our beliefs and expectations as to future outcomes. These statements include, among others, statements relating to the following:

•

Expectations of revenues, profitability, and cash flows;



•

The sufficiency of current and future working capital;



•

The expectation that our 0.50% Convertible Senior Notes due October 2011 (Convertible Senior Notes) will be held to maturity;



•

The ability to obtain financing or raise capital in the future;



•

The expectation of liquidating our investment holdings without significant losses;



•

The value of our common stock;



•

The timing and outcome of clinical studies and regulatory filings;



•

The pace and timing of enrollment in our clinical trials;



•

The expectation and timing of regulatory approvals for drug candidates under development and the timing of related sales;



•

The achievement and/or maintenance of both domestic and international regulatory approvals;



•

The outcome of potential future regulatory actions, including audits and inspections, from the United States Food and Drug Administration (FDA) and international regulatory agencies;



•

The existence and activities of competitors;



•

The pricing of Remodulin® (treprostinil) Injection (Remodulin), Adcirca® (tadalafil) tablets (Adcirca) and Tyvaso® (treprostinil) Inhalation Solution (Tyvaso) (which we refer to as our Commercial Products);



•

The expected volume and timing of sales of our commercial therapies;



•

The dosing and rate of patient use of our Commercial Products;



•

The impact of competing therapies, including generic products, on sales of our Commercial Products;



•

The expectation that we will be able to maintain adequate inventories of our Commercial Products;



•

The adequacy of our intellectual property protections and expiration dates on our patents and licensed patents and products;



•

The ability of third parties to market, distribute and sell our products;



•

The projected timing and costs relating to our construction projects;



•

The potential effects of the Auction-Rate Securities Rights Offer and our expectations regarding the right to borrow thereunder;



•

The expected timing of payments to third parties under license agreements;

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•

The outcome of any litigation or arbitration proceedings in which we are or may become involved;



•

The expected impact of new accounting standards;



•

The expectation that our business tax credit carryforwards will be fully utilized;



•

Any statements preceded by, followed by or that include any form of the words "believe," "seek," "expect," "predict," "anticipate," "forecast," "project," "intend," "estimate," "should," "could," "may," "will," or similar expressions; and



•

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

        The statements identified as forward-looking statements may exist in Item7—Management's Discussion and Analysis of Financial Condition and Results of Operations or in this Annual Report on Form 10-K. 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.

Risks Related to Our Business

We have a history of losses and may not maintain profitability.

        We have experienced financial reporting periods in which we incurred net losses. For example, for the year ended December 31, 2008, we recognized a net loss of approximately $49.3 million as we incurred a fourth quarter charge to research and development of $150.0 million in connection with our license of certain rights to commercialize Adcirca from Eli Lilly and Company (Lilly). We also incurred a net loss of $3.3 million in the quarter ended December 31, 2009. While we believe we formulate our annual cash-based operating budgets with reasonable assumptions and targets, there may be factors that could affect our profitability and cause uneven quarterly and/or annual operating results.

We rely heavily on sales of Remodulin and Tyvaso to produce revenues.

        During the twelve months ended December 31, 2009, net Remodulin sales accounted for approximately 90 percent of our total revenues and Tyvaso, which we commercially launched in September 2009, accounted for approximately five percent of our revenues. A wide variety of events, many of which are described in other risk factors below, could cause net Remodulin and/or Tyvaso sales to decline. For example, if regulatory approvals for Remodulin were withdrawn, we would be unable to sell Remodulin and our business could be jeopardized. In the event that GlaxoSmithKline PLC (Glaxo) terminates its assignment agreement or Pfizer, Inc. (Pfizer) terminates its license agreement, we would have no further rights to utilize assigned patents or trade secrets to develop and commercialize Remodulin and Tyvaso. Any substantial change in the dosing pattern of patients using Remodulin, due to combination therapy, side effects, deaths or any other reason, could decrease related revenues. In addition, we rely on third parties to produce, market, distribute and sell Remodulin and Tyvaso. The inability of any one of these third parties to perform these functions, or the failure of these parties to perform successfully, could negatively affect our revenues. Because we are very dependent on sales of Remodulin and Tyvaso, any reduction in sales of either or both of these products would cause our results of operations to suffer.

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

        We compete with established drug companies for, among other things, funding, licenses, expertise, personnel, clinical trial patients, and third-party collaborators. We also compete with these companies for market share. Most of these competitors have substantially greater financial, marketing, sales, distribution and technical resources than we do. These competitors also have more experience in areas such as research and development, clinical trials, sales and marketing and regulatory matters than we do.

        There are existing treatments that compete with our products, especially in the field of PAH. For the treatment of PAH, we compete with several approved products in the United States and worldwide, including the following: Flolan®, Ventavis®, Tracleer®, Revatio®, Letairis™, Thelin® and two generic epoprostenol formulations. Patients and doctors may perceive these competing products 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 as combination therapy with our competitors' products. In addition, certain competing products are less invasive than Remodulin and the use of these products may delay or prevent initiation of Remodulin therapy. Any of these circumstances may dampen our sales growth, or cause our revenues to decline.

        As a result of merger activity, Actelion Ltd (Actelion), Gilead Sciences, Inc. and Pfizer presently control the majority of the approved therapies for PAH in the United States. In addition to reducing the number of competitors through merger activity, each of these companies has achieved considerable influence over prescribers through the sales and marketing of their respective therapies and through market dominance in this therapeutic area. The future commercialization of additional forms of PAH therapies could exert downward pressure on the pricing of our products and reduce our market share.

Discoveries or development of new products or technologies by others may make our products obsolete or less useful.

        Other companies may discover or introduce new products that render all or some of our technologies and products obsolete or noncompetitive. Our commercial therapies may have to compete with numerous investigational products currently in development. In addition, alternative approaches to treating chronic diseases, such as gene therapy, may make our products obsolete or noncompetitive. Other 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 pharmaceutical products for their patients.

If third-party payers do not reimburse our products, or if third-party payers reduce or limit reimbursements for our products, our sales will suffer.

        Third-party payers such as Medicare, Medicaid and private insurance companies agree to reimburse the costs of our pharmaceutical products. Accordingly, our commercial success is tied to such third-party payers. These third-party payers frequently challenge the pricing of new and expensive drugs. Consequently, it may be difficult for our specialty pharmaceutical distributors or wholesalers to obtain reimbursement of our products from third-party payers. Alternatively, third-party payers may reduce the amount of reimbursement for our products based on changes in pricing of other therapies for PAH, including generic formulations of other approved therapies. If third-party payers do not approve our products for reimbursement, or limit their amount of reimbursement, patients could opt for a competing product that is approved for reimbursement. Presently, most third-party payers, including Medicare and Medicaid, reimburse the cost of our Commercial Products. Our prostacyclin analogue products, Remodulin and Tyvaso, are expensive therapies. The Medicare Modernization Act (MMA) requires that we negotiate a new price for our commercial products with the Centers for

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Medicare and Medicaid Services. As a result of the staggered implementation of the MMA, our products have not yet been subject to its pricing provisions; however, future reimbursements could be subject to reduction. Furthermore, to the extent that private insurers or managed care programs follow any reduced Medicaid and Medicare coverage and payment developments, the negative impact on our business would be compounded. Further legislative developments related to health-care reform at the federal and state level appear likely and such legislation could adversely impact our business.

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.

        Frequently, we involve third parties to assist us in conducting clinical studies, obtaining regulatory approvals, and marketing and distributing our products, as we do not possess the internal capacity to perform all of these functions. Accordingly, the success of these third parties in performing their contractual obligations is critical to our operations. Furthermore, we may not locate acceptable contractors or enter into favorable agreements with them.

        We manufacture treprostinil with raw materials and advanced intermediate compounds supplied by vendors. The inability of our vendors to supply these raw materials and advanced intermediate compounds in the quantities we require could delay the manufacture of treprostinil for commercial use and for use in our clinical trials.

        We rely on Baxter International Inc. (Baxter) to manufacture Remodulin for us. We are also evaluating alternative supply arrangements, including other third-party production arrangements and the production of Remodulin in our combination office and laboratory facility that we recently completed in Silver Spring, Maryland. In addition, we have increased our supply of Remodulin to cover three years of expected demand. If we are unable to implement these alternatives satisfactorily, we may not have sufficient inventory levels of Remodulin to meet future demand.

        Catalent Pharma Solutions, LLC (Catalent) manufactures Tyvaso for commercial use. In addition, Catalent conducts stability studies on Remodulin and Tyvaso for us and analyzes other products that we are developing. We are producing oral treprostinil at our new manufacturing facility in Research Triangle Park, North Carolina. Our process to manufacture oral treprostinil has not been approved by the FDA; therefore, we may encounter unforeseen obstacles in getting the process approved. Catalent also maintains the ability to manufacture oral treprostinil for us.

        NEBU-TEC International Med Products Eike Kern GmbH (NEBU-TEC) retains many responsibilities related to the manufacture of the Tyvaso Inhalation System, which includes a nebulizer and related accessories. Although we manage the manufacturing process, we rely on NEBU-TEC to provide the labor to manufacture the Tyvaso Inhalation System. We rely on NEBU-TEC to adhere to and maintain the manufacturing process in accordance with all applicable regulatory requirements. Any regulatory compliance problems encountered by NEBU-TEC relative to the manufacture of the Tyvaso Inhalation System could adversely affect the sale of Tyvaso. The NEBU-TEC facility is the only facility currently approved for the manufacturing of the Tyvaso Inhalation System. If we are unable to manufacture or supply the Tyvaso Inhalation System in the quantities we require or if our suppliers are unable to supply sufficient parts to manufacture the Tyvaso Inhalation System, it could delay, disrupt or prevent us from selling Tyvaso, which could impede our business and the projected growth in our business.

        We rely on Accredo Therapeutics, Inc. (Accredo), CuraScript, Inc. (CuraScript), and CVS Caremark (Caremark) to market, distribute and sell Remodulin and Tyvaso in the United States. These distributors are also partially responsible for negotiating reimbursements from third-party payers for the cost of our therapies. In January 2010, we notified Accredo, CuraScript and Caremark of our intention to increase the price of Remodulin for all concentrations by 9.6 percent effective March 25, 2010. We

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also intend on increasing the price of Remodulin to our international distributors in 2010. If our distributors do not recognize acceptable profit margins, they may discontinue the sale of our products. Furthermore, if our domestic and international distributors devote fewer resources to selling our products or are unsuccessful in their sales efforts, our revenues will suffer.

        Pursuant to certain rights we licensed from Lilly in 2008 to commercialize Adcirca, Lilly manufactures and supplies Adcirca to 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 could impede the projected growth of our business.

        Although most of our current suppliers and service providers could be replaced, a change in suppliers and/or 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.

        Our manufacturing strategy presents the following risks:

•

We and our third-party manufacturers are subject to the FDA's current Good Manufacturing Practices in the United States and similar stringent regulatory standards internationally. Although we can control compliance issues with respect to our internal synthesis and manufacturing processes, we do not have control over regulatory compliance by our third-party manufacturers;



•

Even if we and our third-party manufacturers were to comply with domestic and international drug manufacturing regulations, the sterility and quality of the products being manufactured could be substandard. If this were to occur, such products would not be available for sale or use;



•

If we have to replace a third-party manufacturer or our own manufacturing operations, the FDA and its international counterparts would require new testing and compliance inspections. Furthermore, a new manufacturer would have to be educated in the processes necessary to manufacture and commercially validate our products, as manufacturing our treprostinil-based products is complex;



•

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



•

The supply of materials and components necessary to manufacture and package our Commercial Products and our other products may become scarce or interrupted. Disruptions to the supply of these materials could delay the manufacture and subsequent sale of such products. Any products manufactured 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.

        Any of these factors could delay clinical trials or commercialization of our products, entail higher costs, and result in the inability to sell our products effectively.

Our operations must comply with extensive FDA and comparable international 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 by such agencies. The process of obtaining and maintaining regulatory approvals for new drugs is lengthy, expensive and uncertain. The manufacture, distribution, advertising and marketing of these products are also subject to extensive regulation. Any future product approvals we receive could be accompanied by significant restrictions on the use or marketing of the product. Potential products may fail to receive marketing approval on a timely basis,

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or at all. If granted, product approvals can be withdrawn for failure to comply with regulatory requirements—e.g., a failure to comply with the FDA's post-marketing requirement and post-marketing conditions for Tyvaso could result in its withdrawal from the market—or upon the occurrence of adverse events subsequent to commercial introduction. We are subject to similar oversight and regulation governing how we manufacture and sell our approved products.

        Discovery of previously unknown problems with our marketed products or problems with our manufacturing, regulatory, compliance, promotional or sales activities could result in regulatory restrictions on our products, 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.

Reports of side effects, such as sepsis, associated with intravenous Remodulin could cause physicians and patients to avoid or discontinue use of Remodulin in favor of alternative treatments.

        Sepsis is a serious and potentially life-threatening infection of the bloodstream caused by a wide variety of bacteria. Intravenous prostacyclins are infused continuously through a catheter placed in a large vein in the patient's chest. Sepsis is an expected consequence of this type of delivery. As a result, sepsis is included as a risk in both the Remodulin and Flolan package inserts. Although a discussion of the risk of sepsis is currently included on the Remodulin label, and the occurrence of sepsis is familiar to physicians who prescribe intravenously administered therapies, concerns about bloodstream infections may adversely affect a physician's prescribing practice of Remodulin.

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, including any devices used to deliver them, are safe and effective. In the past, several of our product candidates failed or were discontinued at various stages in the development process. In addition, 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. In November 2008, we reported that our FREEDOM-C Phase III clinical trial of oral treprostinil did not achieve statistical significance for its primary endpoint. Because we have decided to amend the protocol for our current FREEDOM-M Phase III clinical trial and conduct a new Phase III clinical trial, FREEDOM-C², we expect delays in completing our clinical trials for oral treprostinil and do not anticipate filing a New Drug Application (NDA) prior to 2012.

        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:

•

The drug is ineffective, or physicians believe that the drug is ineffective;



•

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



•

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



•

Patients experience severe side effects during treatment;

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•

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



•

Our clinical trial sites or our contracted clinical trial administrators do not adhere to the trial's protocol;



•

Our trials do not comply with applicable regulations or guidelines;



•

We do not pass inspections by regulatory agencies;



•

Patients die during our trials because of an adverse event related to the trial drug, their disease is too advanced, or they experience medical problems unrelated to the drug being studied;



•

Drug supplies are unavailable or unsuitable for use in our studies; and



•

The results of preclinical testing cause delays in our trials.

        In addition, the FDA and its international equivalents 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.

Our corporate compliance program cannot guarantee that we comply with all potentially applicable federal, state and international regulations.

        The development, manufacture, distribution, pricing, sales, marketing, and reimbursement of our products, together with our general operations, are subject to extensive federal, state, local and international regulations. These regulations are subject to frequent revisions that often introduce more stringent requirements. While we believe we have developed and instituted adequate corporate compliance programs, we cannot ensure that we will always be in compliance with these regulations. If we fail to comply with any of these regulations, we could be subject to a range of penalties including, but not limited to: the termination of clinical trials, the failure to approve a product candidate, restrictions on our products or manufacturing processes, withdrawal of our products from the market, significant fines, exclusion from government healthcare programs, and other sanctions or litigation.

If the licenses, assignments and alliance agreements we depend on are breached or terminated, we could lose our right to develop and sell products covered by such agreements.

        Our business depends upon the acquisition, assignment and license of drugs and other products that have been discovered and initially developed by others. Under our product license agreements, we receive certain rights to existing intellectual property owned by third parties subject to the terms of each license agreement. Our assignment agreements transfer all right, title and interest in and to the intellectual property to us, subject to the terms of each agreement. In addition, we may be required to obtain licenses to other third-party technologies to commercialize our early-stage products. This dependence on technology developed by others involves the following risks:

•

We may be unable to obtain future licenses or assignment agreements at a reasonable cost or at all;



•

If any of our licenses or assignment agreements are terminated, we will lose our rights to develop and market related products;



•

Our license and assignment agreements generally provide the licensor or assignor the right to terminate these arrangements in the event we breach such agreements—e.g., we fail to pay royalties and other fees timely; and



•

If a licensor or assignor fails to maintain the intellectual property licensed or assigned to us as required by most of our license and assignment agreements, we may lose our rights to develop

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and market some or all of our products. In addition, we may be forced to incur substantial costs to maintain the intellectual property ourselves or force the licensor or assignor to do so.

Certain license and assignment agreements may restrict our ability to develop related products in certain countries and/or for particular diseases and may impose other restrictions on our freedom to develop and market our products.

        When we license or are assigned drugs and other products that have been discovered and initially developed by third parties, our rights are frequently limited. For instance, our rights to market Adcirca are geographically limited to the United States and Puerto Rico; however, we would have an opportunity to negotiate with Lilly for the rights to market Adcirca in other territories in the event that Lilly decides not to market Adcirca in a particular country. Furthermore, we cannot undertake any additional investigatory work with respect to Adcirca in other indications of pulmonary hypertension without Lilly's prior approval. Lilly also has authority over all regulatory activities, the right to determine the retail price for Adcirca and the wholesale price at which they sell Adcirca to us.

        Provisions in our license and assignment agreements may impose other restrictions that affect our ability to develop and market related products. For example, Glaxo retained an exclusive option and right of first refusal to negotiate a license agreement with us if we decide to license any aspect of the commercialization of Remodulin and Tyvaso anywhere in the world. Similarly, our amended license agreement with Toray Industries, Inc. (Toray) includes a conditional non-compete clause that grants Toray the right to be our exclusive provider of beraprost-MR. Moreover, we must also meet certain minimum annual sales to maintain our exclusive rights to beraprost-MR.

If our or our suppliers' patents or other intellectual property protections are inadequate, our revenues and profits could suffer or our competitors could force our products out of the market.

        The period under which our commercial and developmental therapies are protected by our patent rights is limited. Our U.S. patent for the method of treating PAH with Remodulin will expire in October 2014 (it has already received the maximum five-year extension). Patents covering methods of making Remodulin and Tyvaso in the U.S. and the EU expire between October 2017 and October 2018. The patent for Adcirca for the treatment of pulmonary hypertension will expire in 2017 and our patents for Tyvaso will expire in the United States and in various countries throughout the EU in 2018 and 2020, respectively.

        Upon the expiration of our patents, competitors may develop generic versions of our products and market those generic versions to compete with our products. Competitors may also seek to design around our patents prior to their expiration to develop competing products.

        The scope of any patent may be insufficient to deter competitors and patent laws of international jurisdictions may not protect our rights to the same extent as the patent laws of the U.S. Furthermore, our suppliers' intellectual property protection may not be adequate. Consequently, competitors may attempt to invalidate our existing patents before they expire. In addition to patent protection, we also rely on trade secrets, proprietary know-how and technological advances. We enter into confidentiality agreements with our employees and others, but these agreements may be ineffective in protecting our proprietary information.

        To the extent third-party patents cover our products or services, we, or our strategic collaborators would be required to seek licenses from the holders of these patents in order to manufacture, use, or sell our products and services. Payments under these licenses would reduce 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 our technology to avoid infringing a third-party patent, we would be unable to market related products and services.

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        We may initiate litigation to enforce or defend our patents or proprietary rights; however, litigation can be time-consuming and costly and may not conclude favorably. If we are unsuccessful with respect to any future legal action in the defense of our patents and our patents are invalidated or canceled, our business could be negatively impacted. Furthermore, any licensed rights, patents or other intellectual property we possess may be challenged, invalidated, canceled, infringed or circumvented and therefore, may not provide us with any competitive advantage.

        In July 2005, Vanderbilt University filed a lawsuit in the U.S. District Court for the District of Delaware against ICOS Corporation (ICOS) seeking to add three of its scientists as co-inventors of the tadalafil compound and method-of-use-patents. Lilly has since acquired ICOS. The patents that were the subject of this lawsuit are the same patents licensed to us by Lilly. In January 2009, the district court judge ruled in favor of ICOS/Lilly, declining to add any of these scientists as an inventor on either patent. The plaintiff has appealed this ruling. Lilly believes these claims are without legal merit and expects to prevail in the appeal; however, it is not possible to determine the outcome. An unfavorable final outcome could have a material adverse effect on our license for Adcirca.

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. Although we currently maintain product liability insurance, we may not be able to maintain this 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 be forced out of business.

Our marketable investments may be subject to a loss in value and liquidity.

        There has been deterioration and instability in the financial markets. Even though we believe we take a conservative approach to investing our funds, these periods of extraordinary disruption and readjustment in the financial markets expose us to investment risk. Related risks could result in a significant loss of value and liquidity of our investments. Furthermore, issuers of the securities we hold could be subject to credit rating downgrades. This could result in future impairment charges with respect to our investment portfolio and our cash flows and operating results could be negatively affected.

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 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.

        Furthermore, we may require additional financing to meet significant future obligations. Our Convertible Senior Notes require partial cash settlement. Specifically, upon conversion we will be required to pay in cash the principal balance of approximately $250.0 million or the conversion value at the settlement date, whichever is less. The Convertible Senior Notes will mature in October 2011, but may be convertible prior to maturity at the election of their holders if certain criteria are met. In addition, awards granted under our non-dilutive Share Tracking Awards Plan (STAP) entitle

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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, the STAP may require significant future cash payments to the extent the price of our common stock continues to appreciate and the number of vested STAP awards increases over time. While we believe that our operating budgets incorporate the anticipated outlays of cash required by the STAP, if we do not have sufficient funds to meet our contractual obligations under the Convertible Senior Notes and the STAP or are unable to secure alternative sources of financing, we could be in default, face litigation and/or lose key employees.

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

        Our research and development and manufacturing activities involve the controlled use of chemical and hazardous substances and we are expanding these activities both in their scale and in new locations. 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 or future environmental laws and regulations can require significant costs; furthermore, we can be subject to substantial fines and penalties in the event of noncompliance. While we believe we comply with laws and regulations governing these materials, the risk of accidental contamination or injury from these materials cannot be completely eliminated. Furthermore, once chemical and hazardous materials leave our site, we cannot control what our hazardous waste removal contractors choose to do with these materials. 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 exceed our resources and could have a materially adverse effect on our business.

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

        Several risks are inherent in our business development plans. Achieving our goals will require continued and substantial investment in research and development, sales and marketing, and facilities. For example, we have spent considerable resources building and seeking regulatory approvals for our laboratories and manufacturing facilities. These facilities may be insufficient to meet future demand for our products or we may have excess capacity at these facilities if future demand falls short of our expectations, or if we do not receive regulatory approvals for the products we intend to produce at these facilities. In addition, constructing our facilities is expensive, and our ability to recover our investment will depend on sales of the products manufactured at these facilities in sufficient volume to increase our revenues substantially. If we experience sales growth, we may have difficulty managing inventory levels as marketing new therapies is complicated, and gauging future demand is often difficult and uncertain.

Our ability to recognize the full value of our business tax credits may be limited.

        As of December 31, 2009, we had approximately $80.9 million in business tax credit carryforwards. These tax credit carryforwards expire on various dates through 2028. The Internal Revenue Service (IRS) has not yet audited or reviewed these business tax credit carryforwards since we began utilizing them for the 2008 tax year. We have conducted reviews of these tax credit carryforwards and have recognized reserves for those tax credits that we believe may be disallowed upon examination by the IRS. However, it is possible that, upon examination, the IRS could reduce our business tax credit carryforwards further. Any reduction in business tax credit carryforwards will increase our tax expense and shorten the period before we are required to pay federal income taxes.

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        In addition, certain business tax credit carryforwards that were generated at various dates prior to December 2008 may be subject to limitations on their use pursuant to Internal Revenue Code Section 382 (Section 382) as a result of ownership changes as defined therein. Presently, we do not expect that these business tax credit carryforwards will expire unused. If Section 382 ownership changes occur in the future, the utilization of related carryforwards may be deferred and may expire unused.

        Furthermore, our future operations may not generate sufficient taxable income in order to utilize our business tax credit carryforwards. Consequently, all or a portion of our business tax credit carryforwards might expire unused.

We have been named as a party to derivative lawsuits. Litigation proceedings are inherently uncertain and could result in an unfavorable outcome.

        Derivative lawsuits have been filed against certain of our directors and named executive officers relating to the modification of awards granted under our STAP and the exchange of certain stock options granted under our Amended and Restated Equity Incentive Plan. We have been named as nominal defendant in these lawsuits. See Part I, Item II1—Legal Proceedings for a more detailed description of these proceedings. The defense of these lawsuits and any future actions could result in significant legal fees, divert our management's attention from the operation of our business, and result in an outcome that could be costly and have an adverse effect on the structure of our compensation plans and our ability to attract and retain employees.

        From time to time, we may be involved in other lawsuits and proceedings incidental to the conduct of our business. We are not a party to any other lawsuit or proceeding that, in the opinion of our management, is likely to have a material adverse effect on our financial position or results of operations.

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 always relate to operating performance. The table below sets forth the high and low closing prices for our common stock for the periods indicated, as adjusted for the two-for-one split of our common stock:

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

•

Quarterly and annual financial and operating results;



•

Failure to meet estimates or expectations of securities analysts;



•

The results of our clinical trials;



•

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 or Medicaid and changes in reimbursement policies of private health insurance companies;

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•

Announcements by us or others of technological innovations or new products or announcements regarding our existing products;



•

Interference in patent or other proprietary rights;



•

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 operations;



•

Failure to maintain, or changes to, our approvals to sell our products;



•

Discovery of previously unknown problems with our marketed products or problems with our manufacturing, regulatory, compliance, promotional, marketing or sales activities that result in regulatory restrictions on our products, including withdrawal of our products from the market;



•

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



•

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;



•

Timing and outcome of additional regulatory submissions and approvals; and



•

General market conditions.

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

        Many independent securities analysts publish independently developed quarterly and annual projections of our revenues and profits. Such estimates are inherently subject to uncertainty. As a result, actual revenues and net income may differ from these projections, and even small variations in reported revenues and profits compared to securities analysts' expectations could have a significant impact on the price of our common stock.

Sales 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 in the public market; or (3) our investors become concerned that substantial sales of our common stock may occur. A decrease in the price of our common stock could make it difficult for us to raise capital or fund acquisitions through the use of our stock.

        The conversion of some or all of the Convertible Senior Notes when the price of our common stock exceeds $52.85 per share would dilute the ownership interests of our existing shareholders. Any sales of our common stock issued upon such conversion could adversely affect the prevailing market price of our common stock. Furthermore, the existence of the Convertible Senior Notes may encourage short selling by market participants because the conversion of the Convertible Senior Notes could depress the price of our common stock.

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The fundamental change purchase feature of the Convertible Senior Notes may delay or prevent an otherwise beneficial attempt to take over our company.

        We may be required to repurchase the Convertible Senior Notes by their holders in the event of a fundamental change, which includes a takeover of our company. This may delay or prevent a takeover of our company that would otherwise be beneficial to our shareholders.

Provisions of Delaware law and our certificate of incorporation, by-laws, shareholder rights plan, and employment and license agreements 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 certificate of incorporation, 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 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.

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

        We enter into certain license agreements that generally prohibit our counterparties to these agreements 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 the prior consent of the counterparties to these agreements if we are contemplating a change in control. If our counterparties to these agreements withhold their consent, related agreements could be terminated and we would lose related license rights. These restrictive change-in-control provisions could impede or prevent mergers that could benefit our shareholders.

Our existing directors and executive officers own a substantial portion of our common stock and might be able to influence the outcome of matters requiring shareholder approval.

        Our directors and executive officers beneficially owned approximately 9.7 percent of our outstanding common stock as of December 31, 2009. Shares beneficially owned include stock options that could be exercised by those directors and executive officers within 60 days of December 31, 2009. Accordingly, these shareholders as a group may be able to influence the outcome of matters requiring shareholder approval, including the election of our directors. Such shareholder influence could delay or prevent a change in control 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 1B.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 2.    PROPERTIES

        Maryland—In December 2009, we completed construction of our new combination office and laboratory facility, which is connected to our leased Phase I laboratory in Silver Spring, Maryland. The Phase I laboratory is used for the synthesis of treprostinil-based compounds and monoclonal antibodies. We expect to use our newly constructed office and laboratory facility to manufacture Remodulin, Tyvaso and monoclonal antibodies for commercial use. It is also our corporate headquarters. Our old corporate headquarters and the buildings adjacent to it will be demolished for the construction of a new office building beginning in 2010, which we expect to be complete in 2012. We also own two other buildings in Silver Spring across the street from our existing buildings, which are used to support our operations. We also lease space at a warehouse near Silver Spring to maintain some of our raw material inventory used in our treprostinil manufacturing and synthesis processes.

        Florida—We own our Remodulin Therapy Assistance office building in Satellite Beach, Florida. Lung Rx, LLC (Lung Rx), also occupies a portion of this building. Our subsidiaries, Lung Rx and Medicomp Inc., lease manufacturing and office space, respectively, in Melbourne, Florida.

        North Carolina—We own a 200,000 square foot combination manufacturing facility and office building in Research Triangle Park, North Carolina, which is occupied by our clinical research and development and commercialization staffs. We warehouse and distribute Tyvaso and manufacture oral treprostinil at this location.

        Other locations— Our legal department occupies leased space in Washington, D.C. We own a building adjacent to this office to house our virology-related government contracting operations. Our subsidiary, Unither Neurosciences, Inc., leases office space in Burlington, Vermont. Our subsidiary, United Therapeutics Europe, Ltd. (UTEL), owns a 24,000 square foot building and land near London, which is their headquarters. UTEL also purchased a building in Oxford, England, which will serve as laboratory space for our glycobiology projects. In addition, United Therapeutics Europe, Ltd., and LungRx Limited lease office space near London, England. Our Canadian subsidiary, Unither Biotech Inc., leases office space in Magog, Quebec, Canada. Our German subsidiary, Unither Therapeutik GmbH, leases office and production space from NEBU-TEC in Elsenfeld, Germany.

        We believe that these facilities are adequate for our current operations and that additional land and facilities for future expansion are reasonably available.

        The office space in Melbourne, Florida, is used in our telemedicine segment. All other properties and leased facilities are used in our pharmaceutical segment.

ITEM 3.    LEGAL PROCEEDINGS

        As previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, on May 7, 2009, purported shareholder Jeffrey Benison IRA filed a derivative complaint in the Court of Chancery for the State of Delaware against those of our directors who were members of our Board of Directors as of December 31, 2008, and us as a nominal defendant. An amended complaint, which the plaintiff filed on August 27, 2009 (purportedly on our behalf), alleged, among other things, that the named director defendants breached their fiduciary duties of loyalty in connection with the 2008 modification of awards granted under the United Therapeutics Corporation Share Tracking Awards Plan (STAP) and the exchange of certain stock options granted under our Amended and Restated Equity Incentive Plan. The amended complaint also alleged that our Chief Executive Officer should not have been able to exchange certain of the stock options she exchanged pursuant to the same 2008 exchange. On October 2, 2009, a second plaintiff, the Retirement Board of

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Allegheny County, filed a derivative complaint asserting similar challenges as the Benison complaint described above, also in the Court of Chancery for the State of Delaware. On November 9, 2009, the Court of Chancery entered an order consolidating these two derivative actions. The order authorizes the plaintiffs to file a consolidated amended complaint and provides that the defendants are not required to respond further to the previously filed complaints. As of February 26, 2010, a consolidated amended complaint has not yet been filed.

        We disclosed the amendment of awards granted under the STAP and exchange of options (including by our Chief Executive Officer) in our filings with the Securities and Exchange Commission, including our Current Reports on Form 8-K filed on June 6, 2008, November 26, 2008, and December 31, 2008, our tender offer statement on Schedule TO, filed on November 26, 2008, and amendments thereto filed on December 5 and 31, 2008, our Annual Report on Form 10-K, filed on February 26, 2009, our Definitive Proxy Statement on Schedule 14A, filed on April 29, 2009, and our Quarterly Reports on Form 10-Q, filed on May 1, 2009, and July 31, 2009. The plaintiffs are seeking unspecified monetary damages, purportedly for United Therapeutics Corporation, as well as attorneys' fees and costs and injunctive relief. We believe the plaintiffs' allegations are without merit and have defended and intend to continue to defend against these claims vigorously. Furthermore, we have been advised that the individual director and officer defendants also intend to defend against these claims vigorously.

        On July 28, 2009, the Retirement Board of Allegheny County also filed a complaint against us in the Court of Chancery for the State of Delaware seeking an order allowing the plaintiff to inspect our records relating principally to the same issues addressed in its derivative lawsuit summarized above, as well as attorneys' fees and costs. We have reached an agreement-in-principle with the plaintiff to resolve this matter, with each party to bear its own fees and costs, and pursuant to which we produced certain corporate books and records in November 2009.

        From time to time, we may be involved in other lawsuits and proceedings incidental to the conduct of our business. We are not a party to any other lawsuit or proceeding that, in the opinion of our management, is likely to have a material adverse effect on our financial position or results of operations.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Equity

        Our common stock (and associated preferred stock purchase rights) trades on the NASDAQ Global Select Market under the symbol "UTHR". The table below sets forth the high and low closing prices for our common stock for the periods indicated, as adjusted for the two-for-one split of our common stock on September 22, 2009:

        As of February 19, 2010, there were 46 holders of record of our common stock. We estimate that there are approximately 13,000 beneficial owners of our common stock. As of February 22, 2010, the closing price of our common stock was $55.06 per share.

Dividend Policy

        We have never paid and have no present intention to pay cash dividends on our common stock in the foreseeable future. We intend to retain any earnings for use in our business operations.

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ITEM 6.    SELECTED FINANCIAL DATA

        The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and the notes accompanying the consolidated financial statements and Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K. The historical results are not necessarily indicative of results to be expected for future periods. The following information is presented in thousands, except per share data.

 

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with our consolidated financial statements and related notes to the consolidated financial statements included in this Annual Report on Form 10-K. 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. These statements are based on our beliefs and expectations about future outcomes and are subject to risks and uncertainties that could cause actual results to differ materially from anticipated results. Factors that could cause or contribute to such differences include those described under Part I, Item 1A—Risk Factors—Forward Looking Statements appearing in this Annual Report on Form 10-K and factors described in other cautionary statements, cautionary language and risk factors set forth in other documents filed with the SEC. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

        United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of unique products to address the unmet medical needs of patients with chronic and life-threatening conditions.

        Our key therapeutic platforms include:

•

Prostacyclin analogues:  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) inhibitors:  molecules that act to inhibit the degradation of cyclic guanosine monophosphate (cGMP) in cells. cGMP is activated by nitric oxide (NO), a naturally occurring substance in the body that mediates the relaxation of vascular smooth muscle;



•

Monoclonal antibodies:  antibodies that act by targeting tumor associated antigens on cancer cells; and



•

Glycobiology antiviral agents:  a novel class of small, sugar-like molecules that have shown pre-clinical indications of efficacy against a broad range of viruses.

        We devote most of our resources to these key therapeutic platforms. In addition, we allocate our resources to developing products in other therapeutic platforms and to commercialization and development of telemedicine products and services, principally for the detection of cardiac arrhythmias (abnormal heart rhythms).

        Our lead product is Remodulin® (treprostinil) Injection (Remodulin) to be administered subcutaneously or intravenously for the treatment of pulmonary arterial hypertension (PAH). The

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United States Food and Drug Administration (FDA) initially approved Remodulin in 2002 for subcutaneous (under the skin) administration. Subsequently, the FDA broadened its approval of Remodulin for intravenous (in the vein) use and for the treatment of patients who require transition from Flolan®, the first prostacyclin analogue approved by the FDA for the treatment of PAH. In addition to the United States, Remodulin is approved in many other countries, primarily for subcutaneous use. In May 2009, the FDA approved Adcirca® (tadalafil) tablets (Adcirca), an oral therapy administered once daily for the treatment of PAH to which we acquired certain exclusive commercialization rights from Eli Lilly and Company (Lilly). And, in July 2009, the FDA approved Tyvaso® (treprostinil) Inhalation Solution (Tyvaso), an inhaled therapy for the treatment of PAH. We launched both Adcirca and Tyvaso for commercial sale in the third quarter of 2009. With the introduction of these two new therapies, we are now able to offer treatments to a broader range of patients who suffer from PAH. In addition, we are continuing to develop an oral treprostinil.

Revenues

        We derive most of our revenues from sales of Remodulin. Beginning with the quarter ended September 30, 2009, we have also recognized revenues from our recently approved therapies, Adcirca and Tyvaso, and expect these sources of revenue to grow over time, as the therapies gain broader acceptance in the market. We sell Remodulin and Tyvaso in the United States to our specialty pharmaceutical distributors: Accredo Therapeutics, Inc. (Accredo), CuraScript, Inc. (CuraScript), and CVS Caremark (Caremark). Adcirca is sold to pharmaceutical wholesalers who are part of Lilly's pharmaceutical wholesaler network. The distribution of Adcirca to patients through pharmaceutical wholesalers is similar to the distribution mechanism used by Adcirca's main competitor, Revatio®. The distribution of Remodulin and Tyvaso through specialty pharmaceutical distributors is similar to the distribution mechanisms of their main competitors, Flolan® and Ventavis®, respectively. We also sell Remodulin to distributors in other countries. Because discontinuation of Remodulin or Tyvaso therapy can be life threatening, we require our distributors to maintain minimum contingent inventory levels; consequently, sales of Remodulin and Tyvaso to our distributors in any given quarter may not be entirely indicative of patient demand. Our distributors typically place one bulk order per month based on their estimates of future demand and considerations of contractual minimum inventory requirements. As such, sales of Remodulin and Tyvaso can be affected by the timing and magnitude of distributor orders.

        Other sources of revenue include telemedicine products and services in the United States. Our telemedicine products and services are designed to detect cardiac arrhythmias and ischemic heart disease, a condition that causes poor blood flow to the heart.

        We operate in a highly competitive market. For instance, a small number of pharmaceutical companies control a majority of the current PAH therapies that are approved for use. There are also a number of investigational products currently in development that, if approved, may erode the market share of our existing commercial therapies. Competing therapies may have a significant impact on our revenues. We expect that the competition within our industry will only continue to increase.

Expenses

        Since our inception, we have devoted substantial resources toward our various research and development initiatives. Accordingly, we incur considerable costs related to our clinical trials and research, conducted both internally and by third parties, on a variety of projects to develop pharmaceutical products. We also seek to license or acquire promising technologies and/or compounds to be incorporated into our development pipeline.

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Major Research and Development Projects

        Our major research and development projects focus on the use of prostacyclin analogues and PDE-5 inhibitors to treat cardiovascular diseases, monoclonal antibodies to treat a variety of cancers, and glycobiology antiviral agents to treat infectious diseases.

Cardiovascular Disease Projects

Tyvaso

        In November 2007, we completed a Phase III clinical trial of Tyvaso in patients with PAH who were also treated with either Tracleer®, an oral endothelin receptor antagonist (ETRA), or Revatio, a PDE-5 inhibitor. This clinical trial, called TRIUMPH-1, demonstrated a highly statistically significant improvement in median six-minute walk distance, the endpoint primarily used to measure improvement in PAH patients.

        Based on the favorable results of TRIUMPH-1, we submitted a New Drug Application (NDA) in June 2008 to obtain FDA approval to market Tyvaso in the United States. In addition, we filed a Marketing Authorization Application (MAA) in December 2008 for Tyvaso with the European Medicines Agency (EMA) using the centralized filing process. In February 2010, we withdrew our MAA from consideration by the EMA due to the EMA's major objection related to findings of non-compliance with good clinical practice (GCP) at two clinical sites. The EMA stated that these findings would preclude a recommendation for approval of Tyvaso in the EU. The EMA had no major objections at the time of withdrawal related to the safety or efficacy of Tyvaso.

        On July 30, 2009, the FDA approved Tyvaso for the treatment of PAH using the Tyvaso Inhalation System. Commercial sales of Tyvaso began in September 2009. In connection with the Tyvaso approval, we have agreed to a post-marketing requirement (PMR) and certain post-marketing commitments (PMCs). PMRs and PMCs are studies that sponsors conduct after FDA approval to gather additional information about a product's safety, efficacy, or optimal use. PMRs are required studies; whereas, a sponsor voluntarily commits to conduct PMCs. We are required to provide the FDA annual updates on our PMR and PMCs. Failure to complete the studies or adhere to the timelines set by the FDA for the PMR could result in penalties, including fines or withdrawal of Tyvaso from the market, unless we are able to demonstrate good cause for not completing the studies or adhering to our timelines.

        In accordance with the PMR, we will conduct a long-term observational study in the U.S. that will include 1,000 patient-years of follow-up in Tyvaso-treated patients, and 1,000 patient-years of follow-up in matched control patients receiving other PAH treatments to evaluate the potential association between Tyvaso and oropharyngeal and pulmonary toxicity. We have submitted a draft protocol of the PMR to the FDA for review, and have committed to submitting the results by December 15, 2013.

        The PMC requires us to modify the Tyvaso Inhalation System in the following ways: (1) create a titratable breath counter; (2) align/key the dome of the device; (3) add a battery back-up power pack; and (4) permanently fix the baffle plate to the dome. As part of the re-engineering process, we have also agreed to perform a usability analysis incorporating the evaluation and prioritization of user-related risk followed by a human factors study, and we will conduct a study in healthy volunteers to collect pharmacokinetic data to verify expected dosing with the modified device. We have submitted draft protocols for these PMCs to the FDA for review, and we have committed to submitting a Supplement to our Tyvaso NDA describing the results no later than October 31, 2010. The human factors study will commence in March 2010; therefore, we believe we are well on track to meet the timeline for final report submission.

        In December 2008, we began enrolling patients in an open-label study in the United States to investigate what occurs when patients on Ventavis®, another inhaled prostacyclin analogue, are switched to Tyvaso. The study is almost complete, but remains ongoing while we finish assessing study patients

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prior to their transition to commercial Tyvaso. Data is being prepared for presentation at scientific symposia.

Oral treprostinil

        In December 2006, we initiated two clinical trials, FREEDOM-C and FREEDOM-M, to evaluate the safety and efficacy of oral treprostinil in patients with PAH.

        The FREEDOM-C Phase III clinical trial was a study of patients currently on approved background therapy using a PDE-5 inhibitor, such as Revatio, or an ETRA, such as Tracleer, or a combination of both. We completed enrollment for FREEDOM-C in May 2008 and in November 2008, we announced that FREEDOM-C failed to achieve statistical significance. Preliminary analysis of the data revealed that the initial tablet strength was too high, which contributed to an inability to dose titrate (increase the dose to tolerability) and prevented the attainment of optimal dosing levels. Consequently, the overall treatment effect of the therapy was muted. However, we believe that the results of the FREEDOM-C clinical trial, particularly as they relate to treatment effect and dosing, support our continued development of oral treprostinil. Accordingly, we commenced a second Phase III clinical trial, FREEDOM-C², to continue studying dosage and efficacy of oral treprostinil in PAH patients on an approved background therapy. Enrollment in FREEDOM-C² began in June 2009.

        The FREEDOM-M Phase III clinical trial is a 12-week study of newly-diagnosed PAH patients not currently on any background therapy. Based on our observations from the FREEDOM-C clinical trial relating to patient tolerability and tablet strength, we submitted a protocol amendment to the FDA in February 2009 to add patients to the ongoing FREEDOM-M trial. These additional patients will be provided a lower-strength tablet (0.25 mg) when they begin the trial and their doses will be titrated in 0.25 mg increments, which we believe will improve tolerability. In addition, our amendment to the FREEDOM-M protocol specifies that the primary statistical analysis of the trial will include only those patients who started the trial using the 0.25 mg tablet. By amending FREEDOM-M we hope to achieve the following objectives: (1) to assess more accurately the effectiveness of oral treprostinil; (2) to improve patient tolerability of oral treprostinil so that an effective maintenance dose can be attained; and (3) to reduce the rate of premature discontinuation due to adverse events. The statistical assumptions of the amended protocol provide for 90% power to observe a 45-meter treatment benefit in six-minute walk distance at the significance level of 0.01. We believe the results of the protocol amendments will reflect the benefits of a favorable dosing regimen for oral treprostinil. In April 2009, we began enrolling patients in FREEDOM-M under the amended protocol.

Beraprost-MR

        Pursuant to our license agreement with Toray Industries, Inc. (Toray), we are developing a modified release formulation of beraprost (beraprost-MR), an oral prostacyclin analogue, for the treatment of PAH. We have completed enrollment of a Phase II clinical trial of beraprost-MR to explore multiple-dose tolerability in patients with PAH, and began a second Phase II clinical trial during the fourth quarter of 2009. The drug substance beraprost consists of equal amounts of four optical isomers, one of which is primarily responsible for the pharmacologic activity of the drug. As we continue clinical development, we plan to explore the development of a modified release drug product containing only the most pharmacologically active isomer. In October 2007, beraprost-MR received regulatory approval in Japan for the treatment of PAH, and in July 2008, beraprost-MR was designated an orphan medicinal product by the EMA.

        From inception to December 31, 2009, we have spent approximately $515.5 million on these and other cardiovascular programs.

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Cancer Disease Projects

        In December 2007, we entered into two agreements with Memorial Sloan-Kettering Cancer Center to license certain rights to two investigational monoclonal antibodies (3F8 and 8H9) for the treatment of neuroblastoma and metastatic brain cancer. We have been granted orphan drug exclusivity in the United States and received a positive opinion from the committee on orphan medicinal products in the European Union (EU) for the use of the 3F8 monoclonal antibody for the treatment of neuroblastoma. In August 2009, we began enrolling patients in a Phase II clinical trial of 3F8 for primary refractory neuroblastoma. We have spent approximately $62.7 million from inception to December 31, 2009, on this and earlier programs in our cancer platform.

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 and clinical stages of testing for the treatment of a wide variety of viruses. Through our research agreement with Oxford, we are also supporting research into new glycobiology antiviral drug candidates and technologies. We are currently testing many of these compounds in preclinical studies and Oxford continues to synthesize new agents. We have spent approximately $42.1 million from inception to December 31, 2009, on our infectious disease programs.

Cost of Product Sales

        Cost of product sales comprises costs to manufacture or acquire products sold to customers. We manufacture treprostinil using advanced intermediate compounds purchased in bulk from several third-party vendors who have the capacity to produce greater quantities of these compounds more cost effectively than we do. In 2009, we received both FDA and EU approval to produce treprostinil in our Silver Spring, Maryland, laboratory facility (Phase I Laboratory). Our manufacturing process has been designed to give us the flexibility to produce both treprostinil diethanolamine (the form of treprostinil used in our oral tablet) and treprostinil (used to produce Tyvaso and subcutaneous and intravenous Remodulin) efficiently in proportion to forecasted demand.

        We acquired the rights to the Tyvaso Inhalation System from NEBU-TEC in September 2009. For 2009 and for part of 2010, the Tyvaso starter kits, consisting of two nebulizers and 28 days of drug and daily supplies, contain nebulizers manufactured by NEBU-TEC prior to our acquisition of that business. Because the starter kits contain two nebulizers, the cost of product sales for the starter kits is higher than the monthly resupply kits, which contain 28 days of drug and daily supplies but no nebulizer.

        We use contract manufacturers to produce all of our products for commercial use. We extended our contract with Baxter Pharmaceutical Solutions, LLC (Baxter), through 2013 and as part of that contract amendment we have agreed that Remodulin will be manufactured on larger production equipment and in larger quantities than the current manufacturing process. This new manufacturing process and related equipment will require FDA approval.

        We are also evaluating alternative supply arrangements, including other third-party production arrangements and the manufacture of Remodulin and Tyvaso in our combination office and laboratory facility that we recently completed in Silver Spring, Maryland (Phase II Facility). During 2009, we increased our inventory of Remodulin and Tyvaso from two years of expected demand to three years of expected demand to ensure that we maintain adequate levels at all times. In addition, we have increased our inventory levels of treprostinil-based compounds to meet similar levels. In conjunction with this projected increase in inventory, we obtained approval in the U.S. and Europe to extend the shelf life of Remodulin from 30 months to 36 months.

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Future Prospects

        Because PAH is a progressive disease without a cure, many patients continue to deteriorate on currently approved therapies. This presents market growth opportunities for Remodulin, Tyvaso and Adcirca as viable alternatives or complements to existing therapies. Furthermore, we anticipate that the market for our commercial products will continue to expand as more patients are diagnosed with PAH each year. We have experienced annual revenue growth in excess of 30 percent since Remodulin was first approved in 2002. One of our principal objectives is to maintain this level of growth. The continued achievement of this objective will depend upon the success of our commercial development of products within our pipeline and our ability to treat a broader spectrum of PAH patients. To this end, we continue to develop oral treprostinil and seek to expand the use of our therapies to treat patients at earlier stages in the PAH disease pathway. With the commercial introduction of Tyvaso and Adcirca, we now expect to reach PAH patients along the full continuum of the disease.

        We believe the outcome of our FREEDOM-M and FREEDOM-C² Phase III clinical trials of oral treprostinil will be successful. Furthermore, we anticipate that the products developed under these clinical trials will generate future sources of revenue. However, prior to FDA approval of oral treprostinil for marketing, we could be required to perform additional studies. This could cause unexpected delays in the commercialization of oral treprostinil and could impede our anticipated revenue growth. Our future growth and profitability will depend on many factors including, among many others: (1) the timing and outcome of clinical trials and regulatory approvals, including the PMC and PMR relating to the FDA's approval of Tyvaso; (2) the timing of the commercial launch of new products; (3) the pricing of and demand for our products and services; (4) reimbursement of our products by public and private insurance organizations; and (5) the competition we face within our industry.

Financial Position

        Cash, cash equivalents and marketable investments (excluding all restricted amounts) at December 31, 2009, were $378.1 million, compared to approximately $336.3 million as of December 31, 2008. The increase in cash and marketable investments was driven mainly by: (1) continued significant sales growth and related cash receipts from sales of Remodulin and the launch of Adcirca and Tyvaso; (2) the reduction in construction-related expenditures as we completed the construction of our facility in Research Triangle Park, North Carolina, during the first quarter of 2009; and (3) $24.4 million in net proceeds received from the exercise of stock options less cash paid for the exercise of awards granted under the United Therapeutics Corporation Share Tracking Awards Plan (STAP) during the twelve-month period ended December 31, 2009.

        Restricted cash and marketable investments were $40.0 million at December 31, 2009, and were comprised of $34.9 million pledged as security for our Phase I Laboratory and $5.1 million placed in the United Therapeutics Corporation Supplemental Executive Retirement Plan Rabbi Trust Document (Rabbi Trust). At December 31, 2008, the components of our restricted cash and marketable investments were $40.7 million pledged as security for our Phase I Laboratory and $5.1 million placed in the Rabbi Trust.

        Accounts receivable at December 31, 2009, was $50.6 million, as compared to $28.3 million at December 31, 2008. The $22.3 million increase was due to higher Remodulin sales in the quarter ended December 31, 2009, as compared to the quarter ended December 31, 2008, and the commercial launch of Tyvaso September 2009.

        Inventory increased $12.0 million during the year ended December 31, 2009, to $26.4 million as a result of our efforts to increase our inventories of Remodulin, Tyvaso and treprostinil from a two-year supply to a three-year supply based on current demand.

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        Goodwill and other intangible assets increased by approximately $10.6 million, from $7.8 million at December 31, 2008, to $18.4 million at December 31, 2009. The increase resulted from the acquisition of the Tyvaso Inhalation Systems business from NEBU-TEC in September 2009.

        Property, plant and equipment at December 31, 2009, was $303.9 million, an increase of $81.2 million from $222.7 million at December 31, 2008. The increase was driven by expenditures for our construction projects in Maryland and North Carolina during the twelve-month period ended December 31, 2009. Construction of our North Carolina facility was completed in February 2009 and construction of our Phase II Facility in Silver Spring, Maryland, was completed in December 2009.

        Other current liabilities increased by $44.9 million from $16.5 million at December 31, 2008, to $61.4 million at December 31, 2009. Since December 31, 2008, our liability for the STAP has increased by approximately $55.7 million primarily as a result of the appreciation in the price of our common stock and the normal vesting accrual of outstanding awards. The increase in STAP liability was partially offset by a $5.4 million reduction in taxes payable, which resulted from estimated tax payments.

        The classification of our $250.0 million 0.50% Convertible Senior Notes due October 2011 (Convertible Senior Notes) shifted from a non-current liability at December 31, 2008, to a current liability at December 31, 2009, because the contingent conversion criteria had been satisfied at December 31, 2009, and the Convertible Senior Notes are therefore convertible at the election of their holders (Note Holders). Specifically, the closing price of our common stock exceeded 120% of the initial conversion price for more than 20 days during the 30 consecutive trading day period ending on December 31, 2009. This conversion determination is measured as of the end of each quarter. Accordingly, classification of the Convertible Senior Notes may change in future quarters.

        Other noncurrent liabilities at December 31, 2009, were $27.1 million as compared to $15.7 million at December 31, 2008. The $11.4 million increase is primarily the result of the $6.6 million contingent consideration liability recorded in connection with the purchase of the Tyvaso Inhalation System business from NEBU-TEC. See Note 18 to the consolidated financial statements included in this Annual Report on Form 10-K for more details on this arrangement.

        Stockholders' equity was approximately $653.0 million at December 31, 2009, compared to approximately $555.3 million at December 31, 2008. The increase of $97.7 million in stockholders' equity was driven in large part by the following: (1) net income of $19.5 million; (2) $32.1 million in net proceeds from the exercise of stock options; and (3) the recognition of $40.1 million in share-based compensation.

Results of Operations

Years ended December 31, 2009 and 2008

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

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