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United Therapeutics Reports 2008 Results

United Therapeutics Corporation (United Therapeutics) has reported total revenues of $281.4 million for the full year of 2008, compared with the total revenues of $210.9 million in the previous year-end. It has also reported net loss of $42.7 million, or $1.87 per diluted share, for the full year of 2008, compared with the net income of $19.8 million, or $0.88 per diluted share, in the previous year-end.

“We are pleased that our revenues for 2008 grew in excess of 30% for the seventh consecutive year to $281.5 million,” remarked Martine Rothblatt, United Therapeutics’ chairman and chief executive officer. “Along with the continued positive trend relative to existing revenues, we are also excited about the potential to reach even more pulmonary hypertension patients in 2009 with inhaled treprostinil and oral tadalafil.”

Total revenues for the three months ended December 31, 2008, were $75.9 million, up from $59.9 million for the three months ended December 31, 2007.

Net loss for the three months ended December 31, 2008, was $81.1 million or $3.42 per basic share, compared to net income of $2.0 million or $0.09 per basic share for the three months ended December 31, 2007. Research and development expense for the three months ended December 31, 2008, included a $150.0 million charge related to a one-time, upfront payment to Eli Lilly & Company (Lilly) pursuant to agreements for the license, manufacture and supply of tadalafil for pulmonary hypertension. Earnings before non-cash charges, a non-GAAP financial measure, defined as net (loss) income before non-cash income taxes, non-cash license fee expenses, depreciation, amortization, impairment charges and share-based compensation (stock option and share tracking award expense), for the three months ended December 31, 2008, was $25.1 million or $1.06 per basic share, compared to $24.1 million or $1.11 per basic share for the three months ended December 31, 2007.

Operating expenses

The company operating expenses principally consist of research and development, selling, general and administrative and costs of service and product sales.

During the three months and year ended December 31, 2008, selling, general and administrative expense decreased as compared to the three months and year ended December 31, 2007, primarily as the result of a reduction in share-based compensation expense. For the three months and year ended December 31, 2007, we recognized share-based compensation expense of approximately $20.3 million and $23.7 million, respectively, representing the fair value of the year-end stock option grant to our chief executive officer, which is determined by a formula set forth in her employment agreement. Based on this formula, our chief executive officer did not receive a stock option grant for the year ended December 31, 2008. Accordingly, during the three months ended December 31, 2008, we reversed approximately $6.4 million in estimated compensation expense that had been accrued through September 30, 2008.

Income tax benefit

As a result of net losses incurred before income taxes, we recognized income tax benefits of $51.6 million and $29.5 million, respectively, for the three months and year ended December 31, 2008. For the three months and year ended December 31, 2007, we recognized income tax benefits of approximately $7.1 million and $3.3 million, respectively. Related tax benefits recognized in 2007 resulted principally from the generation of business tax credits during the year for our orphan drug related research and development activities.