United Therapeutics (UTHR) Q3 Earnings & Sales Beat Estimates

Zacks Equity Research
·6-min read

United Therapeutics UTHR reported earnings of $3.84 per share for the third quarter of 2020, which comprehensively beat the Zacks Consensus Estimate of $2.41 per share and were higher than the year-ago earnings of $3.01 per share.

The above mentioned earnings include the impact of share-based compensation expenses, unrealized gains/losses on equity securities, license related fees, impairment charges and other items. Excluding these items, adjusted earnings were $3.88 per share, up 1% year over year.

Revenues for the reported quarter were $380.1 million, which beat the Zacks Consensus Estimate of $362 million. However, revenues fell 5% year over year.

United Therapeutics markets four products for pulmonary arterial hypertension (PAH) — Remodulin, Tyvaso, Adcirca and Orenitram. Higher sales of Orenitram and Tyvaso offset lower sales of Remodulin and Adcirca in the quarter.

While the company saw a decline in new prescriptions for Remodulin, Tyvaso and Orenitram in the month of April as patients were unable to visit their doctors, the number of new patient prescriptions grew to reach close to pre-pandemic levels toward the end of the third quarter. This led to higher U.S. revenues in the quarter. Meanwhile, the year-ago quarter revenues benefited from an “excess order” by a U.S. distributor, which significantly increased revenues in that quarter. Minus the excess order, sales growth of Remodulin, Tyvaso and Orenitram would have been higher in the third quarter of 2020.

This year so far, the stock has risen 40.1% against the industry’s decrease of 7.8%.

Quarter in Detail

Orenitram sales amounted to $74.7 million in the reported quarter, up 20% year over year due higher volumes resulting from expanded Orenitram label, reflecting the FREEDOM-EV results. Tyvaso sales totaled $129.5 million, up 17% year over year gaining from higher volumes as a result of patient growth and price increases.

Remodulin sales were $124.5 million, down 26% year over year due to lower volumes in Europe as a result of generic competition and the impact of COVID-19. U.S. revenues declined due to the excess order.

Adcirca sales were $13.8 million, down 54% year over year as generic competition resulted in continued erosion of market share in the quarter. Please note that United Therapeutics bought exclusive rights to commercialize Adcirca (tadalafil) for PAH in the United States from Eli Lilly LLY in November 2008. Eli Lilly markets tadalafil as Cialis for erectile dysfunction. Adcirca/Cialis lost exclusivity in 2018 and generic versions are available.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $37.6 million were up 25% year over year.

Research and development (R&D) expenses were $68.7 million in the quarter, down 20% year over year. Selling, general and administrative expense declined 33% to $66.3 million in the quarter.

Pipeline Update

United Therapeutics is working on expanded indications for Orenitram and Tyvaso. A supplemental new drug application to expand the Tyvaso label to include data from the phase III INCREASE study is under review with the FDA with a decision expected in April 2021. The pivotal phase III INCREASE study evaluated Tyvaso in patients with pulmonary hypertension associated with interstitial lung disease (PH-ILD), a lung disease for which no treatments are presently approved. If approved, the label update will increase Tyvaso's eligible U.S. population by more than 30,000 patients.

Other phase III programs include autologous cell therapy (PAH - phase II/III SAPPHIRE study), Treprostinil Technosphere dry powder inhaler (PAH — phase III BREEZE study), Tyvaso in PAH patients who have COPD (phase III PERFECT study) and Ralinepag (PAH — phase III ADVANCE studies). Regarding its clinical studies, the company said that though enrollment of new patients has resumed at select study sites for certain studies after it was paused in the first quarter, it cannot predict when it will be able to re-open enrollment at additional sites for these studies. Meanwhile, enrollment in PERFECT study remains paused. Also, the company expects a delay in completion and data readouts for several ongoing studies.

The company is working on bringing multiple second generation Remodulin drug delivery systems to drive sales growth. These includes RemUnity, a pre-filled, semi-disposable pump system for subcutaneous delivery of Remodulin, which the company has developed in partnership with DEKA. United Therapeutics expected to launch the product in July. However, the timing of commercial launch has been delayed due to pandemic-related issues. The pandemic has hurt its partner, DEKA’s ability to secure certain components and raw materials necessary to build the pumps.

United Therapeutics has developed an Implantable System for Remodulin (ISR), an implantable pump for delivering Remodulin intravenously in collaboration with Medtronic MDT. Though Medtronic’s pre-market approval for the ISR device was given approval by the FDA in December 2017, the launch is pending on the satisfaction of further regulatory requirements by Medtronic, which are not expected to be fulfilled in 2020. Launch of the ISR is not expected before 2021.

United Therapeutics’ Trevyent disposable treprostinil pump system was filed with the FDA in April 2019. However, in April 2020, the FDA issued a complete response letter (CRL) to the NDA indicating that some of the issues previously raised by the FDA were not addressed to its satisfaction. The company expects to re-file the NDA in 2021.

RemUnity and Trevyent, if approved, will provide two expanded options for patients on subcutaneous Remodulin.

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

United Therapeutics Corporation Price, Consensus and EPS Surprise

United Therapeutics Corporation Price, Consensus and EPS Surprise
United Therapeutics Corporation Price, Consensus and EPS Surprise

United Therapeutics Corporation price-consensus-eps-surprise-chart | United Therapeutics Corporation Quote

A top-ranked small drugmaker is Catalent CTLT, which has a Zacks Rank of 1. The stock has risen 62.5% this year so far. Estimates for 2020 have increased from $2.17 to $2.40 per share and from  $2.55 to $2.82 per share for 2021 over the past 60 days.

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