Unsatisfactory study results spark slip in United Therapeutics’ stock

August 28, 2011

When Silver Spring-based United Therapeutics unveiled unsatisfactory clinical data for its oral pulmonary hypertension drug last week, Wall Street delivered a hefty blow to the value of its stock.

Shares of the biotechnology firm slipped 18 percent on Wednesday after the announcement and had yet to bounce back by the close of business Friday. Even in light of recent market swings, the drop was significant.

“It’s very well agreed upon that the sector is more volatile because the valuations of the company depend on the outcome of one specific study, which can come instantly,” said Michael Yee, an analyst at RBC Capital.

Though United Therapeutics lacks the blockbuster caché of other Maryland biotechs such as MedImmune or Qiagen, it ranks among the industry’s most successful companies in the region.

Chief executive Martine Rothblatt founded the firm in 1996 to focus on pulmonary hypertension after her daughter was diagnosed with the disease. The firm now counts 500 employees and projects it will hit $1 billion in revenue by 2013.

But a single misstep in the biotechnology sector can be magnified by the fact that most firms have few products nearing the market at any one time, and those products often require a lot of time and money to develop.

Executives still plan to seek Food and Drug Administration approval for the oral medication based on the successful results of a previous study and the past approval of the drug, called treprostinil, in other forms.

“I don’t know that any regulatory approval pathway is clear as can be. There are always wrinkles along the way,” said Andrew Fisher, chief strategic officer and deputy general counsel. “But there certainly is guidance that suggests this is approvable and we’re pretty confident it will get approved.”

The forms of trepostinil already on the market must be delivered intravenously or inhaled but United Therapeutics created an oral version of the drug to reach patients with less severe forms of pulmonary arterial hypertension.

Symptoms of the chronic, life-threatening illness include breathlessness, dizziness and chest pain due to blood pressure in the arteries between the lungs and heart. The Pulmonary Hypertension Association estimates between 20,000 and 30,000 patients in the United State are treated each year.

The oral form of treprostinil was successful in a study on its own but fell short in two others where it was used alongside other medications. Many patients receive more than one treatment for the disease.

Fisher said an oral version of the drug would likely be used by patients with less severe symptoms of the disease who may resist more invasive treatment. If approved, he estimates it would double the company’s market.

But Yee at RBC Capital said the recent study results cast doubt on the drug’s future.

It “significantly decreases the probability that this product could make it to commercial market and therefore does change the expected growth profile of the company over the next few years,” he said.

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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