Investors reacted positively to
) third quarter results - shares were up 3.8% over two trading
sessions since the earnings release.
Although earnings were below expectations, the company beat
revenue expectations easily and raised its revenue guidance for
Third-quarter 2013 earnings were $1.17 per share, well below
the year-ago earnings of $1.46 and the Zacks Consensus Estimate
of $1.67. Third quarter revenues, however, increased 24.6% to
$302.2 million, beating the Zacks Consensus Estimate of $277
million. Despite an increase in revenues, earnings declined due
to higher operating expenses.
The Quarter in Detail
Third quarter revenues increased primarily due to the
continued increase in the number of patients being prescribed
Remodulin, Tyvaso and Adcirca.
Remodulin revenues increased 9.5% to $132.3 million.
United Therapeutics is working on introducing Remodulin in the
Japanese and Chinese markets which would bring in incremental
sales. While the company expects to launch Remodulin in China in
the second quarter of 2014, it expects to gain approval in Japan
next year as well. Moreover, the company has an agreement with
) for the development of an implantable pump to deliver
Remodulin. The company said that the study met the primary
endpoint - currently, secondary endpoints are being analyzed.
Meanwhile, Tyvaso and Adcirca contributed $120.3 million (up
36.2%) and $47.4 million (up 49%), respectively, to third quarter
revenues. Tyvaso revenues have been picking up consistently and
are now approaching Remodulin revenues. United Therapeutics has
increased the size of its cardiopulmonary specialist force that
promotes Remodulin and Tyvaso. More than 800 doctors are
currently prescribing Tyvaso.
We note that United Therapeutics is facing a patent challenge
for Remodulin injection from Sandoz,
) generic unit. United Therapeutics has filed a patent
infringement lawsuit against Sandoz.
R&D expenses for the third quarter increased 11.7% to
$.72.7 million mainly due to higher share-based compensation
SG&A spending increased 37.1% from the year-ago quarter to
$94.1 million due to higher share-based compensation costs.
United Therapeutics raised its revenue guidance for 2013. The
company now expects 2013 revenues to exceed its previous guidance
of $1.05 billion. Going by the current run rate, United
Therapeutics should be able to achieve its guidance easily.
As far as oral Remodulin is concerned, a response from the FDA
should be out by Feb 16, 2014.
United Therapeutics' third quarter results were encouraging
with all three products performing well. The company remains on
track to cross the $1 billion mark in revenues this year. We
believe United Therapeutics' existing product portfolio will
drive strong top- and bottom-line growth. Other positive news
this quarter included the update on the implantable pump.
Meanwhile, issues remain in the form of the generic challenge
being faced by Remodulin. We expect investor focus to remain on
the patent infringement case as well as the regulatory outcome
for oral Remodulin.
United Therapeutics is a Zacks Rank #3 (Hold) stock.
Currently, companies like
) look well-positioned with a Zacks Rank #1 (Strong Buy).
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