United Therapeutics (UTHR) Q3 Earnings & Sales Top, Stock Up

United Therapeutics UTHR reported earnings of $3.01 per share for the third quarter of 2019, which beat the Zacks Consensus Estimate of $2.34. Earnings rose 24% year over year driven by lower costs.

The abovementioned earnings include the impact of share-based compensation expenses, impairment charges, unrealized gains/losses on equity securities and other items. Excluding these items, adjusted earnings were $3.83 per share, down 4% year over year.

Revenues for the reported quarter were $401.5 million, which beat the Zacks Consensus Estimate of $335 million. Revenues, however, fell 3% year over year owing to loss of exclusivity for Adcirca.

The stock was up 4.6% in response to the better-than-expected third-quarter results. However, so far this year, the stock has declined 17.9% compared with the industry’s decrease of 14.3%.

Quarter in Detail

United Therapeutics markets four products for the treatment of pulmonary arterial hypertension (PAH) – Remodulin, Tyvaso, Adcirca and Orenitram. Please note that United Therapeutics bought exclusive rights to commercialize Adcirca (tadalafil) for the treatment of PAH in the United States from Eli Lilly LLY in November 2008. Eli Lilly markets tadalafil as Cialis for erectile dysfunction. Adcirca/ Cialis lost exclusivity in May last year and generic versions were launched in August.

Adcirca sales were $30.3 million, down 59% year over year as generic competition resulted in lower volumes in the quarter. Orenitram sales amounted to $62 million in the reported quarter, up 15% year over year due to an increase in the number of patients being treated with the drug and price hikes. Tyvaso sales totaled $110 million, up 3% year over year driven by price increase. Remodulin sales were $168.3 million, up 10% year over year as higher volumes of sales to international distributors and U.S. patient growth were partially offset by price reductions.

Please note that Remodulin lost exclusivity in June 2018. A generic version was launched by Novartis’ (NVS) Sandoz in March 2019. More generics are expected to be launched, both in the United States and Europe, which may sharply reduce revenues from this product.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $30.1 million were up 31% year over year due to an increase in the number of vials sold and price increases.

Research and development (R&D) expenses were $85.7 million in the quarter, down 15% year over year. Total selling, general and administrative expense declined 10% year over year to $99.4 million.

Pipeline Update

United Therapeutics is working on expanded indications for Orenitram and Tyvaso. A phase III FREEDOM-EV study evaluated an oral combination therapy of Orenitram – OreniPlus. Earlier this month, United Therapeutics gained FDA approval to get FREEDOM-EV data included on the label of Orenitram. With this label update, United Therapeutics is optimistic that it will be able to double the number of patients treated with Orenitram over the next two to three years.

Other phase III programs include Tyvaso-ILD (Tyvaso being evaluated in patients with PAH associated with idiopathic pulmonary fibrosis), OreniLeft (Orenitram for PAH with heart failure), gene therapy (Aurora-GT) for PAH, Treprostinil Technosphere (PAH), Tyvaso in PAH patients who have COPD and Ralinepag (PAH). We remind investors that United Therapeutics acquired rights to ralinepag from Arena Pharmaceuticals ARNA in January this year. Success in these studies may open up attractive market opportunities and address significant unmet clinical needs.

The company is also working on bringing multiple second generation Remodulin drug delivery systems to drive Remodulin sales growth.

In July, United Therapeutics gained FDA approval for Remodulin Injection in the Implantable System for Remodulin (ISR). United Therapeutics had developed this implantable pump for delivering Remodulin intravenously in collaboration with Medtronic MDT. United Therapeutics and Medtronic pursued parallel regulatory filings related to the device and the drug. Though United Therapeutics has already obtained FDA approval, a final Medtronic approval is awaited before the product can be commercially launched. The system has been developed to eliminate two biggest problems with Remodulin, subcutaneous pain and the life-threatening sepsis risk. The company expects to launch ISR in 2020.

United Therapeutics has also developed a pre-filled, semi-disposable pump system for subcutaneous delivery of Remodulin (RemUnity) in partnership with DEKA. In February 2018, DEKA filed RemUnity with the FDA (510(k) filing) that was cleared in May 2019. United Therapeutics intends to launch the product after it gets an FDA clearance for a special 510(k) filing, which DEKA plans to submit to the FDA shortly. RemoPro, a pain-free subcutaneous Remodulin prodrug, is in phase I studies.

Following the August 2018 merger with SteadyMed, United Therapeutics added the latter’s drug device pipeline product Trevyent for PAH to its portfolio. Trevyent is a single-use, pre-filled pump that has been developed by SteadyMed to deliver a two-day supply of treprostinil subcutaneously using SteadyMed’s PatchPump technology to treat PAH. Trevyent is under FDA review with a decision from the regulatory body expected on Apr 27 next year. RemUnity and Trevyent, if approved, will provide two expanded options for patients on subcutaneous Remodulin.

United Therapeutics currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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