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United Therapeutics PAH Drug's Exclusivity Period Extended

Zacks Equity Research

United Therapeutics Corporation UTHR reported that the FDA has granted six months pediatric exclusivity to its pulmonary arterial hypertension (PAH) drug, Adcirca (tadalafil). This will delay generic competition for the drug for an additional six months.

The pediatric exclusivity has pushed back patent expiry of the oral PDE-5 inhibitor to May 2018. The patent was otherwise set to expire this month. This means a generic version of the drug cannot be approved until then.

Shares of United Therapeutics were up 2.6% on Monday, in response to the positive development. However, a look at United Therapeutics’ share price movement shows that the stock has underperformed the industry this year so far. United Therapeutics stock has declined 12% during this period, while the industry rose 2%.

We remind investors that United Therapeutics bought exclusive rights to commercialize Adcirca for the treatment of PAH in the United States from Eli Lilly LLY in November 2008. Tadalafil is also sold by Lilly as Cialis for erectile dysfunction.

The additional exclusivity for Adcirca was based on some study data submitted by Lilly to the FDA.

Separately, United Therapeutics will be required to pay higher royalties on sales of Adcirca, effective from next month, per a previously announced amendment to the licensing agreement. The royalty rate on Adcirca sales is up from 5% to 10%. United Therapeutics also has to make milestone payments of $325,000 for each $1,000,000 in net product sales.

Adcirca generated sales of $300.4 million in the nine months of 2017, up 15.8% year over year.

Meanwhile, the company has three more PAH products in its portfolio – Remodulin, Tyvaso and Orenitram. With these products, United Therapeutics has a varied range of therapies targeting the PAH market.

Lately, growth of Orenitram, Tyvaso and Remodulin has slowed down due to competition, mainly from Actelion’s new drug, Uptravi (selexipag). Actelion is now part of Johnson & Jonson JNJ. Also some patients are staying longer on front-line oral AMBITION combination therapy (Adcirca + Gilead’s GILD Letairis) and delaying the transition to inhaled/injectable therapies like Tyvaso/Remodulin, thereby hurting their demand.

Meanwhile, Remodulin, which accounts for more than 35% of United Therapeutics’ total sales, could start facing generic competition after June 2018.

United Therapeutics carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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