On May 5, 2021 United Therapeutics Corporation (Nasdaq: UTHR) reported its financial results for the quarter ended March 31, 2021 (Press release, United Therapeutics, MAY 5, 2021, View Source,the%20first%20quarter%20of%202020. [SID1234579209]). Total revenue in the first quarter of 2021 grew 6% year over year to $379.1 million, compared to $356.3 million in the first quarter of 2020.
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"2021 is already a historic year for United Therapeutics, with the recent FDA approval and launch of Tyvaso for treatment of PH-ILD, submission of the Tyvaso DPI NDA, and the launch of our Remunity Pump for Remodulin," said Martine Rothblatt, Ph.D., Chairperson and Chief Executive Officer of United Therapeutics. "In addition to these product launches and the potential Tyvaso DPI approval in December, we are progressing our late-stage pipeline with the commencement of the pivotal TETON study of Tyvaso in IPF, continued enrollment of the pivotal PERFECT study of Tyvaso in PH-COPD, and the ongoing pivotal ADVANCE studies of ralinepag."
"Following approval in late March, we’re already gaining traction with physicians for Tyvaso in PH-ILD, with patient referrals and starts beginning in April," said Michael Benkowitz, President and Chief Operating Officer of United Therapeutics. "The commercial launch of Tyvaso in PH-ILD builds on the momentum we’re already seeing for the Remunity Pump for Remodulin, which provides significant improvements over legacy subcutaneous delivery options."
Net product sales from our treprostinil-based products (Remodulin, Tyvaso, and Orenitram) grew by $8.4 million in the first quarter of 2021 compared to the first quarter of 2020. The reduction in Remodulin revenues was due to decreases of $10.2 million and $4.9 million in U.S. Remodulin net product sales and international Remodulin net product sales, respectively. The growth in Tyvaso revenues resulted primarily from an increase in quantities sold, reflecting an increased number of patients. The growth in Unituxin revenues resulted primarily from an increase in quantities sold.
Expenses
Research and development expense, excluding share-based compensation. Research and development expense for the three months ended March 31, 2021 increased as compared to the same period in 2020, due to: (1) a $107.3 million in-process research and development (IPR&D) impairment charge related to our March 2021 decision to discontinue the U.S. development of Trevyent; (2) a $105.0 million purchase of a pediatric disease priority review voucher, which we redeemed upon submission of the Tyvaso DPI new drug application; (3) a $11.6 million impairment charge related to repurposing one of our facilities; and (4) a $6.1 million IPR&D impairment charge related to our decision to discontinue development of biomechanical lungs.
Selling, general, and administrative expense. The table below summarizes selling, general, and administrative expense by major category (dollars in millions):
Other income, net. The changes in other income, net for the three months ended March 31, 2021, as compared to the same period in 2020, were primarily due to net unrealized and realized gains and losses on equity securities. During the three months ended March 31, 2021, we sold an investment that we held in a publicly-traded company. We received $108.9 million in cash from the sale of the investment and realized a gain of $91.9 million.
Income tax expense. Income tax expense for the three months ended March 31, 2021 and 2020 was $4.2 million and $33.9 million, respectively. The effective income tax rate (ETR) for the three months ended March 31, 2021 and 2020 was 13 percent and 20 percent, respectively. The ETR for the three months ended March 31, 2021 decreased compared to the ETR for the three months ended March 31, 2020 primarily due to excess tax benefits from share-based compensation recognized as a discrete item, relative to the amount of pretax income, and a decrease in valuation allowance, partially offset by an increase in state tax expense.
Non-GAAP Earnings
Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation expense (including expenses relating to stock options, restricted stock units, share tracking awards, and our employee stock purchase plan); (2) impairments of investments in privately-held companies; (3) unrealized gain on an investment in a privately-held company; (4) net changes in recurring fair value measurements; (5) the purchase of a priority review voucher; (6) IPR&D impairment charges; (7) other impairment charges; and (8) tax impact on non-GAAP earnings adjustments.
A reconciliation of net income to non-GAAP earnings is presented below (in millions, except per share data):
PRODUCT COMMERCIALIZATION UPDATE
Thus far in 2021, we have already launched one new product and one new product indication. In February 2021, we launched commercial sales of the Remunity Pump for Remodulin, and in April 2021, we launched a label expansion for Tyvaso to include an indication for PH-ILD following FDA approval on March 31, 2021. We are targeting FDA approval of Tyvaso DPI in late 2021.
Remunity Pump for Remodulin. In February 2021, we announced the commercial launch of the Remunity Pump for Remodulin. The Remunity Pump is a pre-filled, semi-disposable system for subcutaneous delivery of treprostinil, developed in collaboration with DEKA Research & Development Corp. under an exclusive development and license agreement. The system consists of a small, lightweight, durable pump and controller designed to have a service life of at least three years. The pump uses disposable cartridges filled with Remodulin, which can be connected to the pump with less patient manipulation than is typically involved in filling other currently-available subcutaneous pumps.
Tyvaso Inhalation Solution in PH-ILD. In February 2020, we reported that the INCREASE study of Tyvaso in patients with PH-ILD met its primary endpoint of demonstrating improvement in six-minute walk distance (6MWD). Tyvaso also showed benefits across several key subgroups, including etiology of PH-ILD, disease severity, age, gender, baseline hemodynamics, and dose. Significant improvements were also observed in each of the study’s secondary endpoints, including reduction in the cardiac biomarker NT-proBNP, time to first clinical worsening event, change in peak 6MWD at week 12, and change in trough 6MWD at week 15. Treatment with Tyvaso of up to 12 breaths per session, four times daily, in the INCREASE study was well tolerated and the safety profile was consistent with previous Tyvaso studies and known prostacyclin-related adverse events. Comprehensive data from the INCREASE study were recently published in the New England Journal of Medicine.
The FDA approved Tyvaso for the PH-ILD indication on March 31, 2021 and we launched commercial efforts for the new indication shortly thereafter.
Tyvaso DPI. In April 2021, we submitted an NDA for Tyvaso DPI for pulmonary arterial hypertension (PAH) and PH-ILD indications. If the FDA accepts our NDA, we expect the agency’s review to be complete in December 2021. This represents an expedited review timeframe based on the use of a priority review voucher we purchased for $105.0 million in January 2021.
Our Tyvaso DPI NDA includes the results of two clinical studies we conducted of Tyvaso DPI. One was a study in healthy volunteers, comparing the pharmacokinetics of Tyvaso DPI to Tyvaso Inhalation Solution. We completed the study in October 2020, and announced in January 2021 that the study demonstrated comparable systemic treprostinil exposure between Tyvaso DPI and Tyvaso Inhalation Solution. In December 2020, we completed a clinical study (called BREEZE), which evaluated the safety and pharmacokinetics of switching PAH patients from Tyvaso Inhalation Solution to Tyvaso DPI. In January 2021, we announced that the study demonstrated safety and tolerability of Tyvaso DPI in subjects with PAH transitioning from Tyvaso Inhalation Solution.
Implantable System for Remodulin (ISR). Developed in collaboration with Medtronic, the premarket approval application (PMA) for the ISR was approved by the FDA in December 2017. However, our ability to launch the product is subject to Medtronic satisfying various conditions to its PMA approval. We are working with Medtronic to meet these conditions to the FDA’s satisfaction. Based on feedback the FDA recently provided to Medtronic, we do not believe these conditions will be satisfied in time for a 2021 launch. We are working with Medtronic to determine the timing required to address this new feedback. Our ability to launch the ISR on a timely basis, or at all, depends on our ability to work with Medtronic to satisfy the FDA’s conditions and other factors, many of which are entirely outside our control.
RESEARCH AND DEVELOPMENT UPDATE
Updates on selected later-stage programs are below.
Tyvaso in chronic fibrosing interstitial lung diseases — TETON. We are launching a new phase 3 program called TETON, which will be comprised of one or more phase 3 studies of Tyvaso in subjects with various forms of chronic fibrosing interstitial lung diseases, including patients with idiopathic interstitial pneumonias (IIP), chronic hypersensitivity pneumonitis (CHP), and environmental/occupational lung disease. The first TETON study is designed to enroll subjects with IPF. The primary endpoint of this study is the change in absolute forced vital capacity (FVC) from baseline to week 52. We expect to start patient enrollment in this study in the second quarter of 2021.
The TETON program was prompted by data from the INCREASE study, which demonstrated improvements in certain key parameters of lung function in pulmonary hypertension patients with fibrotic lung disease. Specifically, in the INCREASE study, treatment with Tyvaso resulted in significant improvements in percent predicted FVC at weeks 8 and 16, with subjects having underlying etiologies of IIP showing greater improvement. Consistent positive effects were also observed in patients with CHP and environmental/occupational lung disease. These data points, combined with substantial preclinical evidence of antifibrotic activity of treprostinil, suggest that Tyvaso may offer a treatment option for patients with fibrotic lung disease.
Tyvaso in PH-COPD — PERFECT. Enrollment is ongoing for the phase 3 PERFECT study (NCT03496623) evaluating Tyvaso in patients with WHO Group 3 pulmonary hypertension associated with chronic obstructive pulmonary disease (PH-COPD). In a 30-week crossover study, 136 subjects will be randomized between inhaled treprostinil and placebo for a 26-week treatment period. The primary endpoint of the study is the change in 6MWD from baseline to week 12.
Ralinepag phase 3 clinical studies — ADVANCE CAPACITY and ADVANCE OUTCOMES. We are enrolling two phase 3 clinical studies to support the potential approval of oral ralinepag for PAH.
Unituxin in relapsed/refractory neuroblastoma — ANBL1221. Following comments from the FDA ahead of our planned supplemental biologics license application submission, we elected to discontinue development of Unituxin in relapsed/refractory neuroblastoma.
INDUCEMENT RESTRICTED STOCK UNITS
On April 30, 2021, we granted a total of 454 restricted stock units under our 2019 Inducement Stock Incentive Plan to one newly hired employee. These restricted stock units vest in three equal installments on April 30, 2022, 2023, and 2024, assuming continued employment on such dates, and are subject to the standard terms and conditions we filed with the SEC as Exhibit 10.2 to our Current Report on Form 8-K on March 1, 2019. We are providing this information in accordance with Nasdaq Listing Rule 5635(c)(4).
CONFERENCE CALL
We will host a teleconference on Wednesday, May 5, 2021, at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing (866) 209-9943 in the United States, with international callers dialing +1 (825) 312-2282. A rebroadcast of the teleconference will be available for one week and can be accessed by dialing (800) 585-8367 in the United States, with international callers dialing +1 (416) 621-4642, and using access code: 3044748.