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United Therapeutics Corp. (UTHR - Analyst Report) reported first-quarter 2013 earnings of $1.19 per share, well below the year-ago earnings of $1.29 and the Zacks Consensus Estimate of $1.47. First quarter revenues increased 20% to $245.1 million, beating the Zacks Consensus Estimate of $241.0 million.

The Quarter in Detail

Net product revenues, consisting of Remodulin, Tyvaso and Adcirca, increased 19.8% to $243.1 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 $114.7 million, up 3.9%. Remodulin sales should benefit from the approval of the intravenous (IV) formulation in Europe.

United Therapeutics is working on introducing Remodulin in the Japanese and Chinese markets which would bring in incremental sales. While the company gained approval for Remodulin in China, it expects to gain approval in Japan in a year or two. Moreover, the company has an agreement with Medtronic, Inc. (MDT - Analyst Report) for the development of an implantable pump to deliver Remodulin.

Meanwhile, Tyvaso and Adcirca contributed $94.6 million and $33.8 million, respectively, to first quarter revenues.

We note that United Therapeutics is facing a patent challenge for Remodulin injection from Sandoz, Novartis’ (NVS - Analyst Report) generic unit. United Therapeutics has filed a patent infringement lawsuit against Sandoz. A Markman hearing is scheduled to take place in May.

R&D expenses for the first quarter increased 49.8% to $50.4 million mainly due to higher share-based compensation expense.

SG&A spending increased 79.3% from the year-ago quarter to $71.4 million due to higher share-based compensation costs.

Guidance Maintained

United Therapeutics maintained its revenue guidance for 2013. The company expects 2013 revenues to be about $1 billion with a plus/minus margin of 5%.

United Therapeutics is currently a Zacks Rank #3 (Hold) stock. We expect investor focus to remain on the Remodulin patent infringement lawsuit. UCB (UCBJF), a Zacks Rank #1 (Strong Buy) stock, currently looks better-positioned.

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