United Therapeutics (UTHR) Q2 Earnings Flat Y/Y, Shares Dip
United Therapeutics Corporation UTHR reported adjusted earnings of $4.36 per share for the second quarter of 2018, flat year over year. Adjusted earnings excluded the impact of share-based compensation expenses.
Including share-based compensation expenses, earnings came in at $3.98 per share versus a loss of $1.25 per share in the year-ago quarter. The Zacks Consensus Estimate was pegged at $3.36 per share.
Revenues for the reported quarter were $444.5 million, beating the Zacks Consensus Estimate of $349 million. Revenues were also flat year over year as well. Sales, however, increased 14.2% sequentially due to consistent historical distributor purchasing patterns. United Therapeutics’ second-quarter revenues are usually higher than the first.
Shares of United Therapeutics were down more than 5% on Wednesday. In fact, the stock has underperformed the industry this year so far, having declined 21.1% compared with the industry’s decline of 1.2% during the period.
Quarter in Detail
United Therapeutics markets four products for the treatment of PAH – Remodulin, Tyvaso, Adcirca and Orenitram. Please note that United Therapeutics bought exclusive rights to commercialize Adcirca (tadalafil) for the treatment of PAH in the United States from Eli Lilly LLY in November 2008. Lilly markets tadalafil as Cialis for erectile dysfunction. Adcirca sales were $109.8 million, down 9% year over year due to lower volumes, which partially offset price increases.
Orenitram sales amounted to $49.5 million in the quarter, up 8% year over year due to patient growth. Remodulin sales were $159.5 million, up 1% year over year due an increase in orders from U.S. distributors and a price increase taken in April, which offset lower sales in international markets. Tyvaso sales totaled $105.9 million, up 2% year over year due to price increases.
Please note that Remodulin and Adcirca are expected to face generic competition this year, which could reduce sales from these products. Adcirca experienced loss of exclusivity in May this year and generics were expected to enter the market and hurt the drug’s sales significantly. However, no Adcirca generic has been launched yet, though a generic formulation is still expected to be launched this year. Remodulin lost exclusivity in June and generics are expected to be launched soon. However, on the call, management sounded confident that branded Remodulin revenues will continue to rise despite generic competition this year.
Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $19.8 million were up 23% year over year.
Research and development (R&D) expenses escalated 28% to $79.1 million due to higher costs to support the company’s pipeline of cardiopulmonary and cancer drugs and to develop its organ manufacturing projects.
Selling, general and administrative (SG&A) expenses declined 1% to $66.4 million.
United Therapeutics is working on expanded indications for some of its marketed products like Orenitram and Tyvaso. The company, at present, has seven phase III programs in the fields of cardiopulmonary diseases and oncology. A phase III FREEDOM-EV study is evaluating an oral combination therapy of Orenitram –OreniPlus. Full data from this study is expected this year. Meanwhile, a phase III BEAT study is evaluating Tysuberprost - esuberaprost in combination with Tyvaso. Data from this study is also expected this year.
United Therapeutics is also working on multiple second-generation Remodulin drug delivery systems to drive Romudulin sales. On Tuesday, United Therapeutics announced FDA approval of a new drug application (NDA) for the use of Remodulin Injection in the Implantable System for Remodulin (ISR). United Therapeutics had developed this implantable pump for delivering Remodulin intravenously in collaboration with Medtronic plc MDT. United Therapeutics and Medtronic pursued parallel regulatoryfilings related to the device and the drug. Medtronic’s premarket approval application (PMA) for the catheter for ISR was approved by the FDA in December 2017. United Therapeutics resubmitted its new drug application to get implantable pump approved by the FDA in January. The company expects to be ready for commercial launch by early 2019.
United Therapeutics has also developed a pre-filled, semi-disposable pump system for subcutaneous delivery of Remodulin (RemUnity) in partnership with DEKA. In February 2018, DEKA filed RemUnity with the FDA (510(k) filing that was accepted for review by the FDA.
Clinical studies on RemoPro, a pain-free new chemical entity version of treprostinil, are expected to begin this year.
Update on Merger with SteadyMed
In April, United Therapeutics announced a definitive merger agreement with SteadyMed STDY. United Therapeutics will acquire SteadyMed for $216 million including contingent payments. On Tuesday, shareholders of SteadyMed voted to approve the merger. The transaction is expected to close in the third quarter.
With the merger deal, United Therapeutics will add SteadyMed’s drug device pipeline product Trevyent for PAH patients to its portfolio, which could have posed competition to ISR Trevyent is a single-use, pre-filled pump that has been developed by SteadyMed to deliver a two-day supply of treprostinil subcutaneously using SteadyMed’s PatchPump technology to treat PAH. Though SteadyMed received a refuse-to-file letter from the FDA for want of further information, SteadyMed intends to resubmit its NDA by the end of 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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