United Therapeutics Corp. (UTHR) reported fourth-quarter earnings of 15 cents per share, several cents below the Zacks Consensus Estimate of 62 cents but above the year-ago loss of 6 cents. A huge boost in revenues led to the year-over-year improvement in earnings. Fourth quarter revenues, which missed the Zacks Consensus Estimate of $175 million, increased 52.8% to $166.5 million.
Full year earnings came in at $1.78, well above the year-ago earnings of 35 cents, but below the Zacks Consensus Estimate of $1.91. Full year revenues increased from $369.8 million to $603.8 million. Revenues, however, fell short of the Zacks Consensus Estimate of $612 million.
The Quarter in Detail
Revenues increased 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 28.8% to $163.4 million in the reported quarter. United Therapeutics derives the majority of its product revenues from Remodulin, which posted sales of $101.9 million, up 17.9%.
Meanwhile, newly launched products, Tyvaso and Adcirca, contributed $48.7 million and $12.4 million, respectively, to fourth quarter revenues. Tyvaso and Adcirca should both keep contributing significantly to revenues with wider acceptance in the market.
United Therapeutics expects combined Tyvaso and Remodulin revenues to exceed $800 million in the next 18-24 months. EU approval of Remodulin IV is expected in mid 2011.
Meanwhile, Adcirca revenues are expected to reach $100 million in the next 18-24 months thereby bringing total revenues to more than $900 million during that time frame.
R&D expenses for the fourth quarter increased 39.3% to $31.9 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.
United Therapeutics expects to unblind the FREEDOM-M study in June 2011 and the FREEDOM-C2 in September 2011. While the FREEDOM-M study is evaluating oral Remodulin as a monotherapy treatment for pulmonary arterial hypertension (PAH), the FREEDOM-C2 study is evaluating oral Remodulin as a combination therapy for PAH.
SG&A spend increased 32.1% from the year-ago quarter mainly due to significantly higher share-based compensation costs and sales and marketing expenses.
Neutral on United Therapeutics
We currently have a Neutral recommendation on United Therapeutics. We expect investor focus to remain on the results from the FREEDOM program. Positive results would be a major catalyst for United Therapeutics.
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