United Therapeutics Corp.
) reported third-quarter earnings of $1.46 per share, well above
the year-ago earnings of $1.32 and the Zacks Consensus Estimate
of $1.25. Higher revenues led to the year-over-year improvement
Third quarter revenues increased 20.2% to $242.5 million, well
above the Zacks Consensus Estimate of $228 million.
The Quarter in Detail
Net product revenues, consisting of Remodulin, Tyvaso and
Adcirca, increased 19.8% to $240.9 million in the reported
quarter. Revenues increased primarily due to the continued
increase in the number of patients being prescribed Remodulin,
Tyvaso and Adcirca. United Therapeutics derives the majority of
its product revenues from Remodulin, which posted sales of $120.8
million, up 5.1%. Remodulin sales should benefit from the
approval of the IV formulation in Europe.
The company is working on developing Remodulin for the
Japanese and Chinese markets which would bring in incremental
sales. Moreover, the company has an agreement with
) for the development of an implantable pump to deliver
Remodulin. Patient enrolment for the implantable pump study has
been completed with the study scheduled to complete in the third
quarter of 2013.
Meanwhile, Tyvaso and Adcirca contributed $88.3 million and
$31.8 million, respectively, to third quarter revenues.
We note that the company is facing a patent challenge for
Remodulin (treprostinil) injection. Sandoz,
) generic unit, is seeking approval for its generic version of
Remodulin (10 mg/mL). United Therapeutics has filed a patent
infringement lawsuit against Sandoz.
R&D expenses for the third quarter increased 9.6% to $65.2
million mainly due to higher share-based compensation
SG&A spend increased 312.0% from the year-ago quarter to
$68.6 million due to higher share-based compensation costs as
well as general and administrative costs.
United Therapeutics maintained its revenue guidance for 2012.
The company expects 2012 revenues to be about $875 million with a
plus/minus margin of 5%.
Neutral on United Therapeutics
We currently have a Neutral recommendation on United
Therapeutics, which carries a Zacks #3 Rank (short-term 'Hold'
rating). The company suffered a major setback in October 2012
with the FDA issuing a complete response letter for the company's
lead pipeline candidate, oral Remodulin. 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 candidate. Although we
believe United Therapeutics' existing 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.
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