EUR 850.00 For Business Accounts Only

Morningstar | Increasing United Therapeutics FVE to $114 After FDA Approval of Implantable Remodulin Pump. See Updated Analyst Note from 01 Aug 2018

After earlier rejections in 2016 and 2017, the Implantable System for Remodulin, developed by Medtronic in collaboration with United Therapeutics, received Food and Drug Administration approval July 31. We expect the early 2019 launch to help United retain some Remodulin patients, given the attractive convenience of the next-generation delivery system. After adjusting for the approval of the implantable pump, we are increasing our fair value estimate for narrow-moat United Therapeutics to $114 per share from $110.

Drug sales recovered from a weak first quarter and posted flat revenue growth year over year in the second quarter, with the treprostinil franchise up slightly and offsetting single-digit declines in Adcirca sales. United's ability to fend off generic competition while it pushes late-stage pipeline candidates across the finish line of approval underpins our narrow moat rating, but we acknowledge the firm's competitive advantage is weakening with generic threats and maintain a negative moat trend rating. Remodulin, which declined a concerning 13% in the first quarter, was up 1% year over year and 26% sequentially in the second quarter, but we expect declines with generic entry expected later this year. Adcirca's loss of exclusivity in May makes generic competition imminent, and we expect to see further Adcirca declines in the second half of this year. With generic entry on the horizon, all eyes are turned to the firm's late-stage pipeline candidates as they near filing, approvals, and launches. The firm has seven phase 3 trials underway, spanning pulmonary hypertension, gene therapy, and small-cell lung cancer, with upcoming data readouts as early as the third quarter for the Freedom-EV study of mortality and morbidity of Orenitram (oral treprostinil).