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United Therapeutics (UTHR) Down Despite Q1 Earnings Beat

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United Therapeutics (UTHR - Free Report) reported earnings of $3.12 per share for the first quarter of 2020 against a loss of $11.32 per share in the year-ago quarter. The Zacks Consensus Estimate was pegged at $2.43

The abovementioned earnings include the impact of share-based compensation expenses, impairments of investments, unrealized gains/losses on equity securities/privately held company and other items. Excluding these items, adjusted earnings were $3.61 per share, up 1% year over year.

Revenues for the reported quarter were $356.3 million, which beat the Zacks Consensus Estimate of $348 million. However, revenues fell 2% year over year due to generic competition for Adcirca.

United Therapeutics markets four products for pulmonary arterial hypertension (PAH) — Remodulin, Tyvaso, Adcirca and Orenitram. The company clarified that new patient starts for Remodulin, Tyvaso, and Orenitram were not impacted by the coronavirus outbreak in the quarter. However, most prescriptions in the quarter for new patients were issued before the outbreak in the United States. Importantly, the company said it noticed a decline in new prescriptions for the three products in the month of April as patients were unable to visit their doctors. As such the company expects a reduction in new patient starts in future quarters. In-fact, the company said that due to the uncertainty surrounding the impact of the pandemic, it cannot predict revenue growth for 2020 as there is lack of visibility regarding its prospects and product development plans.

The stock was down more than 1.6% despite the better-than-expected results. This year so far, the stock has risen 22.6% against the industry’s decrease of 11.0%.

 

 

Quarter in Detail

Adcirca sales were $12.5 million, down 38% year over year as generic competition resulted in lower volumes in the quarter. Please note that United Therapeutics bought exclusive rights to commercialize Adcirca (tadalafil) for PAH in the United States from Eli Lilly (LLY - Free Report) in November 2008. Eli Lilly markets tadalafil as Cialis for erectile dysfunction. Adcirca/Cialis lost exclusivity in 2018 and generic versions are available.

Orenitram sales amounted to $69.0 million in the reported quarter, up 18% year over year due to an increase in volume and price hike. Tyvaso sales totaled $102.9 million, down 1% year over year due to higher gross-to-net revenue deductions and lower volumes which offset the impact of price increase. Remodulin sales were $145.3 million, down 7% year over year due to lower volumes and price reductions. Remodulin lost exclusivity in June 2018 and generic versions have been launched. However, the company specified that despite generic availability, U.S. patient demand for Remodulin remained stable. Lower international sales hurt Remodulin sales in the fourth quarter.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $26.6 million were up 7% year over year as price increases offset the impact of decrease in the number of vials sold

Research and development (R&D) expenses were $68.6 million in the quarter, down 92% year over year as last year’s R&D costs included an $800.0 million upfront payment to Arena Pharmaceuticals (ARNA - Free Report) and $12.5 million to MannKind Corporation per collaboration deals signed last year. General and administrative expense rose 2% to $55.0 million in the quarter while sales and marketing costs declined 4% to $13.0 million.

Pipeline Update

United Therapeutics is working on expanded indications for Orenitram and Tyvaso. In February, the company 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 in mid 2020 to expand the Tyvaso label to include INCREASE study data by mid-2020. Along with the earnings release, the company said that the INCREASE filing remains on track despite the coronavirus pandemic.  If approved, the label update will increase Tyvaso's eligible U.S. population by more than 30,000 patients.

Other phase III programs include autologous cell therapy (PAH - phase II/III SAPPHIRE study), Treprostinil Technosphere dry powder inhaler (PAH — phase III BREEZE study), Tyvaso in PAH patients who have COPD (phase III PERFECT study) and Ralinepag (PAH — phase III ADVANCE studies). Success in these studies may open up attractive market opportunities and address significant unmet clinical needs. However, regarding its clinical studies, the company said that the patients already enrolled in studies continue to receive the study drug. However, it has stopped new patient enrollment in the studies and said that completion and data readouts for several of the ongoing and planned studies will be delayed

The company is working on bringing multiple second generation Remodulin drug delivery systems to drive sales growth. Some improved Remodulin delivery devices are expected to be launched in the next 18 months, which can widen its market. This includes RemUnity, a pre-filled, semi-disposable pump system for subcutaneous delivery of Remodulin which the company has developed in partnership with DEKA.

In February 2020, 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. Meanwhile, United Therapeutics has developed and Implantable System for Remodulin (ISR), an implantable pump for delivering Remodulin intravenously in collaboration with Medtronic (MDT - Free Report) . Though Medtronic’s pre-market approval for the ISR device was given approval by the FDA in December 2017, the launch is pending on the satisfaction of further regulatory requirements by Medtronic, which are not expected to be fulfilled in 2020. Launch of the ISR is not expected before 2021.

Also, United Therapeutics’ Trevyent disposable treprostinil pump system is under review with the FDA. This month, however, the FDA issued a complete response letter (CRL) to the NDA indicating that some of the issues previously raised by the FDA have not yet been addressed to its satisfaction.

RemUnity and Trevyent, if approved, will provide two expanded options for patients on subcutaneous Remodulin.

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