We recently downgraded
) to a Neutral recommendation with a $48.00 target price.
United Therapeutics suffered a major blow with the US Food and
Drug Administration (FDA) issuing a complete response letter
(CRL) for the company's new drug application for oral Remodulin
(treprostinil). The company was looking to get oral Remodulin
approved for the treatment of pulmonary arterial hypertension
While United Therapeutics said that it intends to gain
approval for the candidate within four years, we have low
visibility on the company's development plans for the
The company's lead product is Remodulin, an injectable
formulation of treprostinil, indicated for the treatment of PAH
in patients with New York Heart Association (NYHA) Class II-IV
symptoms. Remodulin is approved for both subcutaneous (SC) and
intravenous (IV) use. The other two PAH products in the company's
portfolio are Adcirca (tadalafil) and Tyvaso.
United Therapeutics holds a strong position in the PAH market
with three approved products targeting this indication. Lead
product Remodulin continues to look very strong in both the IV
and SC forms. EU approval for the IV formulation, received in
late December 2011, should drive sales further. The company is
looking to launch Remodulin in new territories including Japan
and China. The Japanese market could bring in incremental sales
of about $100 million.
Although we believe United Therapeutics' existing PAH product
portfolio will drive strong top-and bottom-line growth, we prefer
to remain on the sidelines until we gain more information on the
company's plans for oral Remodulin.
We are also concerned about the company's dependence on
Remodulin for revenues. Remodulin, which accounted for 57.9% of
total sales in 2011, is currently facing a generic challenge from
) generic division. The company needs to develop products that
could help make up for the loss of revenues in the event of
genericization of Remodulin.
Although United Therapeutics has several candidates in its
pipeline, these products are still in too early stages of
development to get excited about. The approval of oral Remodulin
would have helped long-term growth. However, given the FDA's CRL,
there could be a significant delay in the approval process for
the candidate. Given the early stage nature of the rest of the
pipeline, we do not see any near-term pipeline catalysts that
could drive the stock. United Therapeutics holds a Zacks #3
(short-term 'Hold' rating) Rank.
NOVARTIS AG-ADR (NVS): Free Stock Analysis
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