UTHR Files Suit vs. Sandoz

United Therapeutics Corporation ( UTHR - Analyst Report ) recently filed a patent infringement lawsuit against Sandoz, Novartis’ ( NVS - Snapshot Report ) generic unit, which is seeking approval for its generic version of Remodulin (treprostinil; 10 mg/mL). The lawsuit has been filed in the US District Court for the District of New Jersey.

The lawsuit was filed in response to a Paragraph IV Certification Notice Letter received from Sandoz on Feb 3, 2012. Sandoz has filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA) for its generic version of Remodulin.

Sandoz is challenging three patents – one that expires in October 2014, another that expires in October 2017 and a third that expires in March 2029. According to Sandoz, all these patents are invalid, not enforceable and will not be infringed by Sandoz’s product.

Remodulin, the key revenue generator at United Therapeutics, accounts for more than 65% of sales – the entry of generic competition would, therefore, be a major blow to the company. In such a scenario, we believe United Therapeutics will leave no stone unturned in its efforts to delay the entry of generics.

With the lawsuit being filed within 45 days of receipt of notice from Sandoz, the FDA cannot grant final approval to Sandoz’s generic for up to 30 months.

United Therapeutics is currently working on expanding Remodulin’s label. Remodulin is currently approved for both subcutaneous (SC) and intravenous (IV) use in the US for the treatment of pulmonary arterial hypertension (PAH).

The company is looking to get an oral formulation of Remodulin approved for the treatment of PAH. The FDA is scheduled to respond on the NDA for oral treprostinil by October 27, 2012.

Neutral on United Therapeutics

We currently have a Neutral recommendation on United Therapeutics, which carries a Zacks #3 Rank (short-term Hold’’ rating). We believe the company is well-positioned to gain share in the PAH market. Remodulin continues to look very strong in both the IV and SC forms.

With the approval of Adcirca and Tyvaso, the company has a varied range of therapies available for the treatment of PAH. We believe United Therapeutics’ PAH product portfolio will drive strong top-and bottom-line growth. However, we are not too bullish on the company’s chances of gaining US approval for oral treprostinil, given the mixed data on the candidate. Moreover, the company’s weak late-stage pipeline concerns us.