Maryland biotech's shares leap 37%

United Therapeutics reports drug success

November 02, 2007|By Andrea K. Walker | Andrea K. Walker,SUN REPORTER

United Therapeutics Corp. shares soared more than 35 percent to a six-year high yesterday after the Silver Spring biotech announced that it successfully completed the final trials on a drug developed to treat a debilitating lung disease.

United Therapeutics said it plans in the first half of next year to ask the Food and Drug Administration for approval to bring the drug, Viveta, to market. Viveta is an inhaled form of the drug Remodulin, which has been the company's chief moneymaker over the years.

"This is a big milestone for the company," said Paul Nadeau, managing director at Cowen and Co., an investment banking company in New York that follows the health care industry.

"This drug is expected to be the next driver of earnings and revenue growth for the company," Nadeau said.

The company also said yesterday that third-quarter earnings increased nearly 75 percent, far surpassing Wall Street fore- casts.

That, combined with the news of the completed drug trial, sent shares surging $25.67, or 37.5 percent, to close at $94.11 on the Nasdaq stock market. The increase was the largest on the exchange yesterday and marked the company's biggest stock gain since shares shot up 59 percent on Aug. 10, 2001.

Analysts said they expect the drug to win FDA approval.

The approval process takes six to 10 months, meaning the drug could be available to consumers by 2009.

"We think most of the clinical risks has been eliminated with these highly significant results," said Joseph Schwartz, an analyst with Leerink Swann & Co. "We expected this, but others wanted to actually see the data before they got involved in the stock. That's why the stock is up so much."

Viveta is designed to treat pulmonary hypertension, which reduces the amount of oxygen in the blood carried from the heart to the lungs and often leads to heart failure. The drug enables blood to flow more freely through the pulmonary artery, making it easier to breathe.

Remodulin, which has the same primary chemical makeup, has been shown to prolong the life of patients.

The Viveta trial measured how far patients with the disease could walk in six minutes. United Therapeutics found that people who had just inhaled Viveta could walk 20 meters farther then those who took a placebo. Patients in the trial inhaled the drug four times a day for 12 weeks.

The company also found that four hours after inhaling Viveta, patients could walk 14 meters farther than those who didn't take it.

Side effects included coughing, headache, nausea, dizziness and flushing.

Viveta is different than Remodulin in that it is inhaled directly into the lungs. Remodulin is given continuously and requires patients to carry a pack with a machine that administers the drug intravenously. The company and analysts said they believe there is a market for both drugs.

Although Viveta was tested in conjunction with other drugs used to treat the disease, the company and analysts said it could be used by itself.

"This is a complete knock-the-cover-off-the ball success ... and comprehensively demonstrates the efficacy of the drug," Martine Rothblatt, United Therapeutics' chief executive officer, told analysts during a conference call yesterday. She said it was the company's largest call ever, with 450 participants.

United Therapeutics is one of the few biotechnology companies in Maryland that has been able to bring drugs to market and make money. MedImmune Inc., based in Gaithersburg and now a subsidiary of AstraZeneca PLC, is another.

Sales of United Therapeutics' hypertension drug helped drive up third-quarter earnings. The company reported net income of $14.8 million, or 70 cents per share for the quarter, which ended Sept. 30. That was a 74 percent increase over the $8.5 million, or 37 cents per share, in the corresponding period a year ago.

Revenue was $59 million, a 46 percent increase over the $40.4 million reported a year ago.

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