United Therapeutics Corp. (UTHR) reported third-quarter earnings of 66 cents per share, several cents above the Zacks Consensus Estimate of 54 cents and the year-ago earnings of 21 cents. A huge boost in revenues helped drive earnings.
The Quarter in Detail
Revenues increased 75.9% to $170.9 million, well above the Zacks Consensus Revenue Estimate of $148 million. The year-over-year increase in revenues was primarily due to the continued increase in the number of patients being prescribed Remodulin, price increases for Remodulin, and contributions from new products, Tyvaso and Adcirca.
Net product revenues, consisting of Remodulin, Tyvaso and Adcirca sales, increased 78.9% to $168.3 million in the reported quarter. United Therapeutics derives the majority of its product revenues from Remodulin, which posted sales of $109.6 million, up 25.4%. Meanwhile, newly launched products, Tyvaso and Adcirca, contributed $48.7 million and $9.9 million, respectively, to third quarter revenues. While about 70% of Tyvaso patients came from other oral therapies, Ventavis switches accounted for 20%. The remaining 10% consist of patients who have moved from parenteral therapy to Tyvaso. United Therapeutics expects to capture 80% of the inhaled market space before Ventavis loses exclusivity.
Tyvaso and Adcirca should both keep contributing significantly to revenues with wider acceptance in the market. Moreover, United Therapeutics is looking to significantly increase the size of its sales force. In addition to having a dedicated sales force for Adcirca, the company intends to double the size of the Tyvaso-Remodulin sales force. With sales reps reaching out to additional prescribers, we expect Tyvaso revenues to increase significantly in 2011.
R&D expenses for the third quarter increased 29% to $40.7 million mainly due to an increase in expenses associated with the company’s FREEDOM phase III program, and also increased expenses associated with the development of beraprost-MR. We expect R&D spend to remain robust as United Therapeutics continues to work on building its pipeline.
Meanwhile, SG&A spend increased 13.4% from the year-ago quarter mainly due to significantly higher share-based compensation costs and general and administrative expenses. SG&A spend should also increase, given the company’s plans to increase the size of its sales force.
Neutral on United Therapeutics
We currently have a Neutral recommendation on United Therapeutics. The company is well-positioned to gain share in the pulmonary hypertension (PAH) market. Leading product, Remodulin, continues to look very strong in both the intravenous (IV) and subcutaneous (SC) forms. With the approval of Adcirca and Tyvaso, United Therapeutics now has a varied range of therapies available for the treatment of PAH. We believe the company’s PAH product portfolio will drive strong top- and bottom-line growth.
The next major catalyst for United Therapeutics would be positive results from ongoing studies for the development of oral Remodulin.
UTD THERAPEUTIC (UTHR): Free Stock Analysis Report
Zacks Investment Research
