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UTHR Inks Licensing Deal

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United Therapeutics Corporation (UTHR) recently entered into an exclusive licensing agreement with Pluristem Therapeutics Inc. (PSTI) for the use of Pluristem’s PLacental eXpanded (PLX) cells for the development and commercialization of a cell-based product for the treatment of pulmonary hypertension.

Terms of the Deal

Per the terms of the agreement, United Therapeutics will gain exclusive global rights for the development and commercialization of the candidate. Meanwhile, Pluristem will retain manufacturing rights. In addition to participating in pre-clinical and clinical trial activities, Pluristem will be responsible for providing the commercial grade product.

United Therapeutics will initially make an upfront payment of $7 million to Pluristem. Additional payments would become due on the achievement of regulatory milestones. The upfront payment plus milestone and other payments could total approximately $55 million.

United Therapeutics, which will take on all the costs associated with conducting clinical studies for the pulmonary hypertension indication, will also reimburse developmental and clinical costs incurred by Pluristem.

Once the product is commercialized, United Therapeutics will purchase commercial supplies from Pluristem at a specified margin over Pluristem's cost. Moreover, Pluristem will also receive royalties based on United Therapeutics’ gross profits from the product.

According to the National Library of Medicine, about 1,000 new cases of pulmonary hypertension are diagnosed in the US every year. With this agreement, which is scheduled to close by the end of Aug, United Therapeutics is looking to expand its pipeline. The company currently has three approved products (Remodulin, Adcirca and Tyvaso) in its portfolio targeting the pulmonary hypertension (PAH) market.

Neutral on United Therapeutics

United Therapeutics is currently working on an oral version of Remodulin. Preliminary data from the FREEDOM-C2 study, that is being conducted with oral Remodulin, are due in September 2011. We expect investor focus to remain on this upcoming event. We currently have a Neutral recommendation on United Therapeutics.

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