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United Therapeutics (UTHR) Down on Q4 Earnings & Sales Miss

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United Therapeutics UTHR reported earnings of $1.20 per share for the fourth quarter of 2019, down 18.9% year over year. The Zacks Consensus Estimate was pegged at $2.47

The abovementioned earnings include the impact of share-based compensation expenses, license-related fees, unrealized gains/losses on equity securities and other items. Excluding these items, adjusted earnings were $1.96 per share compared with $3.34 per share in the year-ago quarter.

Revenues for the reported quarter were $311.1 million, which missed the Zacks Consensus Estimate of $350 million. Revenues also fell 18.4% year over year.

In the quarter, sales of United Therapeutics’ pulmonary arterial hypertension (PAH) products, Remodulin, Tyvaso and Orenitram, were hurt by inventory destocking by one distributor.

The stock was down more than 6% in response to weak sales and profits reported for the fourth quarter. In the past year, the stock has declined 16.2% compared with the industry’s decrease of 10.3%.

 

 

Quarter in Detail

United Therapeutics markets four products for PAH — Remodulin, Tyvaso, Adcirca and Orenitram. Please note that United Therapeutics bought exclusive rights to commercialize Adcirca (tadalafil) for PAH in the United States from Eli Lilly LLY in November 2008. Eli Lilly markets tadalafil as Cialis for erectile dysfunction. Adcirca/ Cialis lost exclusivity in 2018 and generic versions are available.

Remodulin also lost exclusivity in June 2018. A generic version was launched by Novartis’ NVS generic arm Sandoz in March 2019. Par Sterile Products and Teva received FDA approval for their Remodulin generics in September and October 2019, respectively, and may launch the same in the United States soon. More generics may be unveiled in Europe and the United Sates, which may reduce revenues from this product in the future quarters.

Adcirca sales were $27.8 million, down 33% year over year as generic competition resulted in lower volumes in the quarter. Orenitram sales amounted to $50.9 million in the reported quarter, up 3% year over year due to an increase in the number of patients being treated with the drug and price hikes, which partially offset the negative impact of the distributor adjustment. Tyvaso sales totaled $91.4 million, down 14% year over year. Remodulin sales were $107.4 million, down 32% year over year due to the distributor adjustment and unfavorable patient mix as some higher dosage patients switched to generic treprostinil. However, the company specified that despite generic availability, U.S. patient demand for Remodulin remains stable. Lower international sales also hurt Remodulin sales in the fourth quarter.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $33.6 million were up 39% year over year due to an increase in the number of vials sold and price increases.

Research and development (R&D) expenses were $109.6 million in the quarter, down 22% year over year as higher costs for pipeline development were offset by easy comparison with the fourth quarter of 2018, which included some upfront payments. General and administrative expense rose 6% to $61.7 million in the quarter while sales and marketing costs went up by 10% to $18.6 million.

2019 Results

Full-year 2019 sales rose 11% to $1.44 billion, missing the Zacks Consensus Estimate of $1.49 billion. Adjusted earnings of $12.94 per share declined 15.8% year over year. In 2020, United Therapeutics expects its revenues to grow above 2019 levels.

Pipeline Update

United Therapeutics is working on expanded indications for Orenitram and Tyvaso. A phase III FREEDOM-EV study evaluated an oral combination therapy of Orenitram — OreniPlus. In October 2019, United Therapeutics gained an FDA approval to get FREEDOM-EV data included in the label of Orenitram. With this label update, United Therapeutics is optimistic that it will be able to double the number of patients treated with Orenitram over the next two to three years.

Earlier this week, United Therapeutics announced that the pivotal phase III INCREASE study evaluating Tyvaso in patients with PAH associated with interstitial lung disease met its primary efficacy endpoint of demonstrating improvement in six-minute walk distance. The study also met its key secondary endpoints. The company plans to submit a supplemental new drug application to expand the Tyvaso label to include INCRESAE study data by mid-2020.

The company is also working on bringing multiple second generation Remodulin drug delivery systems to drive sales growth.

In July 2019, United Therapeutics gained FDA approval for Remodulin Injection in Implantable System for Remodulin (ISR). United Therapeutics had developed this implantable pump for delivering Remodulin intravenously in collaboration with Medtronic MDT. United Therapeutics and Medtronic pursued parallel regulatory filings related to the device and the drug. The system has been developed to eliminate two biggest problems with Remodulin, subcutaneous pain and the life-threatening sepsis risk. However, along with the earnings release, United Therapeutics said it expects to launch ISR in 2021, delayed from the prior expectation of 2020.

United Therapeutics has also developed RemUnity, a pre-filled, semi-disposable pump system for subcutaneous delivery of Remodulin in partnership with DEKA. In February 2018, DEKA filed RemUnity with the FDA (510(k) filing) that was cleared by in May 2019. Earlier this week, United Therapeutics gained an FDA clearance for a special 510(k) filing and expects to launch the product in July. RemoPro, a pain-free subcutaneous Remodulin prodrug, is in phase I studies.

Also, United Therapeutics’ Trevyent disposable treprostinil pump system is under review with the FDA. However, along with the earnings release, the company said that the FDA’s current action date of Apr 27, 2020 for Trevyent may be extended as the regulatory agency noticed some deficiencies in the NDA and asked for some information. Though the company has provided some information to address the deficiencies, it believes the action date may be extended or the FDA may issue a complete response letter if it is not satisfied with the company’s response. This negative news may also have resulted in the share price decline.

United Therapeutics currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United Therapeutics Corporation Price, Consensus and EPS Surprise

 

United Therapeutics Corporation Price, Consensus and EPS Surprise

United Therapeutics Corporation price-consensus-eps-surprise-chart | United Therapeutics Corporation Quote

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