By Michael S. Rosenwald
Washington Post Staff Write
Wednesday, August 2, 2006

Stocks go up. They go down. But rarely this much in both directions in a day:

United Therapeutics Corp. of Silver Spring, one of the region's few profitable drug companies, excited investors yesterday, reporting better-than-expected financial results that sent shares up 6 percent.

That was early in the morning. Not long afterward, the company's shares gave up all the gain and then some, closing down 11.7 percent from the day before, after executives disclosed slow enrollment in testing a new version of the company's only drug.

Shares closed at $52.40, down $6.91 from Monday's close.

The firm reported that fiscal third-quarter net income fell 37 percent, to $7.7 million (30 cents a share) from $12.2 million (49 cents) a year ago. Revenue for the period ended June 30 rose 34 percent, to $40.2 million. The firm handily beat Wall Street expectations.

"It was a stellar quarter that was marred by perceived disappointing rates" of enrollment in the new drug study, said Jennifer Chao, a Deutsche Bank AG analyst.

United Therapeutics sells Remodulin, a treatment for pulmonary arterial hypertension, a rare condition of dangerously high blood pressure in arteries between the heart and lungs. The drug needs to be continuously pumped into the body, a big inconvenience, so the company is testing an inhaled version.

The results came out early in the morning, and that's when shares started to rise. Later, during a conference call, the company's executives were asked how many patients had been signed up to test the inhaled version. Wall Street had been expecting 100 to 110 users. The answer was 90, and the shares started falling.

Fred Hadeed, the chief financial officer, attributed the company's slower-than-expected enrollment to stiff competition for patients suffering from pulmonary arterial hypertension. More than a dozen major drug studies are underway for the condition. In the United States, 25,000 to 50,000 people have the disease.

The firm hopes to enroll 200 people in its test. "We are 100 percent confident that we will be able to complete this trial," Hadeed said. The company would not say whether the slow enrollment would cause a delay in reporting results from the test, though some analysts think so.

Separately, the company said yesterday that Hadeed would soon step down as chief financial officer to focus on business development, a responsibility he had previously balanced with his finance duties. John Ferrari, the company's treasurer, is to become chief financial officer.