United Therapeutics (UTHR) Q1 Earnings Rise, Sales Drop Q/Q

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United Therapeutics Corporation  UTHR reported adjusted earnings of $3.76 per share for the first quarter of 2018, which rose 4% from the year-ago quarter due to lower SG&A costs and tax rate. The Zacks Consensus Estimate was pegged at $3.46 per share. Adjusted earnings excluded the impact of share-based compensation gains.

Revenues for the reported quarter were $389.2 million, beating the Zacks Consensus Estimate of $385 million. Revenues rose 5% year over year. Sales, however, declined 16.3% sequentially due to unfavorable timing/pricing of distributor orders.

United Therapeutics' first-quarter revenues are usually down or flat from the prior-year fourth quarter levels due to unfavorable timing and magnitude of distributor orders, which are typically placed once a month based on current utilization trends and contractual minimum inventory requirements.

Shares of United Therapeutics were down almost 7% on Wednesday. In fact, the stock has underperformed the  industry this year so far, having declined 29.5% compared with the industry's decline of 2.5% during the period.

Quarter in Detail

United Therapeutics markets four products for the treatment of 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. Lilly markets tadalafil as Cialis for erectile dysfunction. Lilly carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Adcirca sales were $97.6 million, up 22% year over year driven by price increases.

Orenitram sales amounted to $52.2 million in the quarter, up 33% year over year due to patient growth and a one-time positive impact from an amendment in contractual minimum inventory levels with a U.S. distributor. Remodulin sales were $126.8 million, down 13% year over year due to a reduction in orders from U.S. and international distributors. Tyvaso sales totaled 94.6 million, up 8% year over year due to price increases. However, the amendment in contractual minimum inventory levels, discussed above, hurt sales of both Remodulin and Tyvaso.

Please note that Remodulin and Adcirca are expected to face generic competition this year, which could reduce sales from these products.

Unituxin's (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $18.0 million were flat year over year.

Research and development (R&D) expenses escalated 41% to $58.2 million due to higher costs to support the company's pipeline of cardiopulmonary and cancer drugs and to develop its organ manufacturing projects.

Selling, general and administrative (SG&A) expenses declined 4% to $66.1 million.

Pipeline Update

United Therapeutics is working on expanded indications for some of its marketed products like Orenitram and Tyvaso. The company, at present, has seven phase III programs in the fields of cardiopulmonary diseases and oncology. A phase III FREEDOM-EV study is evaluating an oral combination therapy of Orenitram -OreniPlus. Full data from this study is expected this year. Meanwhile, a phase III BEAT study is evaluating Tysuberprost - esuberaprost in combination with Tyvaso. Data from this study is also expected this year.

United Therapeutics is also working on new delivery mechanisms for Remodulin. The company is working with Medtronic plc MDT to get RemoSynch, an implantable pump for delivering Remodulin intravenously, approved by the FDA. In order to launch RemoSynch in the United States, United Therapeutics and Medtronic are pursuing parallel regulatory filings related to the device and the drug. Medtronic premarket approval application (PMA) for the catheter for RemoSynch was approved by the FDA in December 2017. United Therapeutics resubmitted its new drug application to get RemoSynch approved by the FDA in January. With a six-month review period, FDA action is expected on Jul 30. United Therapeutics expects to launch the RemoSynch system by early 2019.

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 accepted for review by the FDA.

Clinical studies on RemoPro, a pain-free new chemical entity version of treprostinil, are expected to begin this year.

Several data read-outs and regulatory updates are expected in 2018.

To Acquire SteadyMed

Earlier this week, United Therapeutics announced a definitive merger agreement with SteadyMed Ltd. STDY . United Therapeutics will acquire SteadyMed for $216 million including contingent payments. With the deal, United Therapeutics will add SteadyMed's drug device pipeline product Trevyent for PAH patients to its portfolio, which could have posed competition to United Therapeutics' RemoSynch.

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. Though SteadyMed received a refuse-to-file letter from the FDA for want of further information, SteadyMed intends to resubmit its NDA by the end of 2018.

United Therapeutics Corporation Price, Consensus and EPS Surprise

United Therapeutics Corporation Price, Consensus and EPS Surprise | United Therapeutics Corporation Quote

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: LLY , MDT , UTHR ,

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