United Therapeutics Corp.
) reported fourth-quarter earnings of 77 cents per share, well
above the year-ago earnings of 23 cents but below the Zacks
Consensus Estimate of 87 cents. Higher revenues and lower costs led
to the year-over-year improvement in earnings.
Fourth quarter revenues, which increased 19.2% to $195.2
million, missed the Zacks Consensus Estimate of $204 million.
Lighter-than-expected revenues were attributed to fluctuations in
Full year earnings came in at $3.66 per share, a penny above the
Zacks Consensus Estimate, and well above the year-ago earnings of
$1.87 per share. Revenues came in at $743.2 million, missing the
Zacks Consensus Estimate of $756 million. Revenues, however,
increased 25.3% from the year-ago period.
The Quarter in Detail
Net product revenues, consisting of Remodulin, Tyvaso, Adcirca
and other sales, increased 18.9% to $194.3 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 $107.1 million, up
The company is working on developing Remodulin for the Japanese
and Chinese markets which could bring in incremental sales. United
Therapeutics expects to file for Japanese approval of Remodulin
later this year/early next year.
Meanwhile, newly launched products, Tyvaso and Adcirca,
contributed $64.5 million and $22.6 million, respectively, to
fourth quarter revenues.
Both Remodulin and Tyvaso revenues declined on a sequential
basis. The decline was attributed to fluctuations in ordering
United Therapeutics is currently seeking US approval for oral
Remodulin for the treatment of pulmonary arterial hypertension
(PAH). 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). We believe United Therapeutics will file a
patent infringement lawsuit against Sandoz so that Sandoz's product
cannot receive FDA approval until a court rules in Sandoz' favor or
for up to 30 months, whichever comes earlier.
R&D expenses for the fourth quarter declined 21.4% to $48.6
million mainly due to lower share-based compensation expense and
lower expenses associated with the development of beraprost-MR.
SG&A spend fell 15% from the year-ago quarter mainly due to
lower share-based compensation costs.
United Therapeutics maintained its revenue guidance for 2012 and
2013. The company expects 2012 and 2013 revenues to be about $875
million and $1 billion, respectively, with a plus/minus margin of
5%. The company still has $88 million left in its ongoing share
buyback program which should drive the bottom line.
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 is well-positioned to gain share in the PAH
market. Remodulin continues to look very strong in both the
intravenous (IV) and subcutaneous (SC) forms.
With the approval of Adcirca and Tyvaso, United Therapeutics now
has a varied range of therapies available for the treatment of PAH.
We believe the company's PAH product portfolio will drive strong
top-and bottom-line growth.
However, we remain concerned about United Therapeutics' weak
pipeline and increasing competition in the PAH market. Moreover,
our expectations for oral Remodulin gaining approval in 2012 are
low given the mixed data on the candidate.
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