United Therapeutics Corp. (UTHR) reported first-quarter profit of 32 cents per share, a couple of cents above the Zacks Consensus Estimate and 28% above the year-ago earnings of 25 cents. A huge boost in revenues helped drive earnings despite an increase in operating expenses.
 
Revenues increased 61.6% to $128.9 million in the reported quarter, primarily due to the continued increase in the number of patients being prescribed Remodulin and contributions from new products, Tyvaso and Adcirca.
 
Net product sales, consisting of Remodulin, Tyvaso and Adcirca sales, increased 63.5% to $125.7 million in the reported quarter. United Therapeutics derives the majority of its product revenues from Remodulin, which posted sales of $95.8 million, up 24.7%.
 
Meanwhile, newly launched products, Tyvaso and Adcirca, contributed $24.9 million and $5 million, respectively to first quarter revenues. Both products should start contributing significantly to revenues with wider acceptance in the market.
 
R&D expenses for the first quarter increased 66.4% to $34.9 million mainly due to an increase in non-cash, share-based compensation expenses. We expect R&D spend to remain robust as United Therapeutics continues to work on building its pipeline.
 
United Therapeutics also recorded a huge increase (60.4%) in selling, general and administrative expenses, which came in at $46.9 million. The increase in SG&A spend was mainly due to an increase in share-based compensation expense and expenses incurred in connection with launch activities related to Adcirca and Tyvaso.
 
We believe United Therapeutics is well-positioned to gain share in the pulmonary hypertension (PAH) market, which has players such as Gilead (GILD), Pfizer (PFE) and GlaxoSmithKline (GSK) among others. While its leading product Remodulin continues to look very strong, United Therapeutics now has a varied range of therapies available for the treatment of PAH with the recent approval of Adcirca and Tyvaso.
 
Going forward, strong contributions from Remodulin and the recently launched Adcirca and Tyvaso should help the company achieve strong top-line growth in 2010 and beyond. We currently have a Neutral recommendation on United Therapeutics.
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