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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended		June 30, 2002

OR

[   ]

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

For the transition period from ___________________________ to ___________________________

Commission file number 0-26301

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

Delaware		52-1984749
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
1110 Spring Street, Silver Spring, MD		20910
(Address of Principal Executive Offices)		(Zip Code)

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

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

The number of shares outstanding of the issuer’s common stock, par value $.01 per share, as of August 12, 2002 was 20,897,422.

INDEX

				Page
Part I.   FINANCIAL INFORMATION (UNAUDITED)
	Item 1. Financial Statements
		Consolidated Balance Sheets			1
		Consolidated Statements of Operations			2
		Consolidated Statements of Cash Flows			3
		Notes to Consolidated Financial Statements			4
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations				9
	Item 3. Quantitative and Qualitative Disclosures About Market Risk				15
Part II.   OTHER INFORMATION
	Item 1. Legal Proceedings				16
	Item 2. Changes in Securities				16
	Item 4. Submission of Matters to a Vote of Security Holders				16
	Item 5. Other Information				16
	Item 6. Exhibits and Reports on Form 8-K				18
SIGNATURES					20

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

UNITED THERAPEUTICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

					June 30,				December 31,
					2002				2001
					(Unaudited)
Assets
	Current assets:
		Cash and cash equivalents			$	15,546			$	24,373
		Marketable investments				132,229				31,677
		Accounts receivable, net of allowance of $153 for 2002 and $198 for 2001				10,587				1,452
		Interest receivable				2,604				2,772
		Prepaid expenses				1,787				917
		Inventories				6,619				6,025
		Other current assets				325				1,787
			Total current assets			169,697				69,003
	Marketable investments					—				116,249
	Certificate of deposit					623				605
	Goodwill, net					7,465				7,465
	Other intangible assets, net					7,438				7,900
	Property, plant, and equipment, net					6,731				6,403
	Investments in affiliates					7,175				4,342
	Note receivable from employee and other					1,475				154
			Total assets		$	200,604			$	212,121
Liabilities and Stockholders’ Equity
	Current liabilities:
		Accounts payable			$	5,757			$	6,349
		Accounts payable to affiliates				176				318
		Accrued expenses				2,840				3,454
		Due to affiliates				2,143				500
		Current portion of notes and leases payable				107				102
		Other current liabilities				31				75
			Total current liabilities			11,054				10,798
	Notes and leases payable, excluding current portion					1,799				1,836
	Due to affiliates					1,710				3,079
	Other liabilities					5				9
			Total liabilities			14,568				15,722
	Stockholders’ equity:
		Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued				—				—
		Series A junior participating preferred stock, par value $.01, 100,000 authorized, no shares issued				—				—
		Common stock, par value $.01, 100,000,000 shares authorized, 21,424,022 and 20,751,820 shares issued at June 30, 2002 and December 31, 2001, respectively, and 20,897,422 and 20,225,220 outstanding at June 30, 2002 and December 31, 2001, respectively				214				208
		Additional paid-in capital				363,725				365,235
		Accumulated deficit				(171,029	)			(162,170	)
		Treasury stock, 526,600 shares				(6,874	)			(6,874	)
			Total stockholders’ equity			186,036				196,399
			Total liabilities and stockholders’ equity		$	200,604			$	212,121

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

1

UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(UNAUDITED)

				Three months ended June 30,								Six months ended June 30,
				2002				2001				2002				2001
Revenues:
	Sales			$	11,564			$	1,178			$	12,970			$	2,441
	Sales to affiliates				—				136				—				355
		Total revenue			11,564				1,314				12,970				2,796
Operating expenses:
	Research and development				7,275				9,597				11,783				18,066
	General and administrative				2,944				3,075				5,528				6,996
	Sales and marketing				811				890				1,330				1,733
	Cost of sales				1,913				725				2,683				1,530
		Total operating expenses			12,943				14,287				21,324				28,325
		Loss from operations			(1,379	)			(12,973	)			(8,354	)			(25,529	)
Other income (expense)
	Interest income				1,859				2,453				3,859				5,738
	Interest expense				(30	)			(54	)			(65	)			(93	)
	Equity loss in affiliate				(67	)			(93	)			(144	)			(155	)
	Other-net				(2	)			20				(55	)			(11	)
	Write-down of marketable investments				(3,561	)			—				(4,100	)			—
		Total other income (expense)			(1,801	)			2,326				(505	)			5,479
Net loss before income tax					(3,180	)			(10,647	)			(8,859	)			(20,050	)
Income tax					—				—				—				—
Net loss				$	(3,180	)		$	(10,647	)		$	(8,859	)		$	(20,050	)
Net loss per common share - basic and diluted				$	(0.16	)		$	(0.53	)		$	(0.43	)		$	(0.99	)
Weighted average number of common shares outstanding - basic and diluted					20,521,215				20,277,089				20,374,035				20,334,556

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2

UNITED THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)

						Six months ended June 30,
						2002				2001
Cash flows from operating activities:
	Net loss					$	(8,859	)		$	(20,050	)
		Adjustments to reconcile net loss to net cash used in operating activities:
			Depreciation and amortization				1,007				1,381
			Loss on disposals of equipment				—				16
			Stock options to consultants				153				611
			Amortization of premium/discounts on investments				1,071				(106	)
			Reserve for inventory obsolescence				300				—
			Equity loss in affiliate				144				154
			Write-down of marketable investments				4,100				—
		Changes in operating assets and liabilities:
			Accounts receivable				(9,090	)			(802	)
			Interest receivable				168				—
			Inventories				(1,175	)			(1,388	)
			Prepaid expenses				(870	)			(315	)
			Note receivable and other assets				(1,526	)			22
			Accounts payable				(592	)			34
			Due to affiliates				—				109
			Accrued expenses				(614	)			935
			Other liabilities				(48	)			(151	)
				Net cash used in operating activities			(15,831	)			(19,550	)
Cash flows from investing activities:
	Purchases of property, plant and equipment						(637	)			(330	)
	Proceeds from disposals of property, plant and equipment						1				25
	Investment in AltaRex						(2,846	)			—
	Purchases of marketable investments						(1,218	)			(37,170	)
	Sales and maturities of marketable investments						11,727				21,876
				Net cash provided by (used in) investing activities			7,027				(15,599	)
Cash flows from financing activities:
	Proceeds from the exercise of stock options						10				4
	Payments to repurchase common stock						—				(2,459	)
	Principal payments on notes payable						(10	)			(8	)
	Principal payments on capital lease obligations						(23	)			(32	)
				Net cash used in financing activities			(23	)			(2,495	)
	Net decrease in cash and cash equivalents						(8,827	)			(37,644	)
	Cash and cash equivalents, beginning of period						24,373				200,935
	Cash and cash equivalents, end of period					$	15,546			$	163,291
Supplemental schedule of cash flow information -
	Cash paid for interest					$	69			$	78
	Noncash investing and financing activities -
			Equipment acquired under a capital lease			$	—				56

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

3

UNITED THERAPEUTICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(UNAUDITED)

1. ORGANIZATION AND BUSINESS DESCRIPTION

     United Therapeutics Corporation (United Therapeutics) is a biotechnology company focused on the development and commercialization of unique therapeutics to treat chronic and life-threatening diseases. United Therapeutics is active in three therapeutic areas — cardiovascular medicine, infectious disease and oncology — with five therapeutic platforms — prostacyclin analogs, arginine formulations, telemedicine, monoclonal antibody immunotherapy and iminosugar antiviral agents. United Therapeutics was incorporated on June 26, 1996 under the laws of the State of Delaware and has four wholly owned subsidiaries: Lung Rx, Inc., Unither Pharmaceuticals, Inc. (UPI), Unither Telemedicine Services Corp. (UTSC), and United Therapeutics Europe, Ltd.

     On May 21, 2002, the U. S. Food and Drug Administration (FDA) approved Remodulin® (treprostinil sodium) Injection for the treatment of pulmonary arterial hypertension in patients with NYHA class II-IV symptoms to diminish symptoms associated with exercise. United Therapeutics’ agreed with the FDA that it would perform a post-marketing phase IV clinical study to further assess the clinical benefits of Remodulin. The phase IV study must be completed within 24 months from the May 2002 approval and continued FDA approval is conditioned on the completion and outcome of the phase IV study. Regulatory approvals in France, Canada, Switzerland and Israel are pending. Additionally, United Therapeutics is planning clinical studies of Remodulin in critical limb ischemia. Preclinical development of the lead iminosugar agent, UT231B, has been completed and Phase I studies in normal volunteers have been initiated. United Therapeutics is also currently assessing the feasibility of conducting a phase III pivotal study of OvaRex® for the treatment of metastatic ovarian cancer. OvaRex is an immunotherapeutic monoclonal antibody that completed phase II testing prior to being in-licensed to United Therapeutics in April 2002.

     Approximately 500 patients receive Remodulin therapy worldwide, of which approximately 60% are reimbursable patients. Virtually all of the currently non-reimbursable patients reside in countries where Remodulin is not yet approved. Remodulin is sold and marketed in the U.S. by Priority Healthcare Corporation and Accredo Therapeutics, Inc. United Therapeutics is the manufacturer of Remodulin and sells Remodulin in bulk shipments to these distributors. The timing and extent of United Therapeutics’ sales of Remodulin are based on the timing and extent of these bulk orders from distributors. Sales of Remodulin and Remodulin delivery pumps and supplies are recognized as revenue when delivered to the distributors.

2. BASIS OF PRESENTATION

     The consolidated financial statements included herein have been prepared, without audit, pursuant to Regulation S-X of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto contained in United Therapeutics’ Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission.

     In the opinion of United Therapeutics’ management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, necessary to present fairly its financial position as of June 30, 2002 and its results of operations and its cash flows for the three and six-month periods ended June 30, 2002 and 2001. Interim results are not necessarily indicative of results for an entire year.

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3. MARKETABLE INVESTMENTS

     United Therapeutics’ marketable investments, mainly corporate and federally sponsored debt securities and certificates of deposit, were historically considered held-to-maturity securities due to United Therapeutics’ ability and intent to hold those investments until maturity. Held-to-maturity investments are recorded at amortized cost in the balance sheet. The portfolio consisted of over 100 issues and had a weighted average maturity of approximately 1.6 years. In light of recent adverse changes in the bond markets, United Therapeutics began reassessing its investment program in June 2002. As a result of this reassessment, United Therapeutics decided to liquidate all marketable debt securities in the portfolio and invest the proceeds in money market funds, commercial paper and federal instruments. The entire investment portfolio was sold in July 2002. This resulted in a reclassification of the portfolio from the held-to-maturity category to the available-for-sale category. As a result of the reclassification and due to other-than-temporary impairments in the value of its investment portfolio, United Therapeutics recorded a charge against earnings of approximately $3.6 million for the three months ended June 30, 2002. At June 30, 2002, marketable investments reported at fair market value in the balance sheet totaled approximately $132.2 million, which reflects United Therapeutics estimate of realizable value based on quoted market prices on that day. In July 2002, United Therapeutics recorded an additional realized loss of approximately $3.3 million as a result of the liquidation of the investment portfolio and adverse bond market conditions.

4. INVENTORIES

     United Therapeutics manufactures certain compounds and purchases Remodulin delivery pumps and medical supplies for sales to distributors and use in its ongoing clinical trials. United Therapeutics purchases components for and assembles cardiac monitoring equipment. United Therapeutics contracts with a third party manufacturer to make the HeartBar® products. These inventories are accounted for under the first-in, first-out method. At June 30, 2002 and December 31, 2001, inventories consisted of the following (in thousands):

5. GOODWILL AND OTHER INTANGIBLE ASSETS

     In July 2001, the Financial Accounting Standards Board (the FASB) issued SFAS No. 142, Goodwill And Other Intangible Assets (SFAS No. 142). SFAS No. 142 addresses the method of identifying and measuring goodwill and other intangible assets acquired in a business combination, eliminates further amortization of goodwill and requires periodic evaluations of impairment of goodwill balances. United Therapeutics adopted SFAS No. 142 on January 1, 2002.

     United Therapeutics reviews the recoverability of goodwill and other intangible assets annually or more frequently if events occur which may impair these assets. The measurement of possible impairment is based primarily on the ability to recover the balance of the goodwill and other intangible assets from expected future operating cash flows on an undiscounted basis. Impairment losses are recognized when expected future cash flows are estimated to be less than the asset’s carrying value. In management’s opinion, no impairment exists at June 30, 2002.

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