United Therapeutics Shares Soar on FDA Report

United Therapeutics said yesterday that final human testing of an inhaled form of its lead drug, a treatment for pulmonary hypertension, exceeded the minimal requirements set by the Food and Drug Administration, sending its shares up 38 percent.

The announcement came on the same day the Silver Spring company, one of the few profitable biotech firms in the region, reported third-quarter profit that increased 74 percent, to $14.8 million.

The company's shares jumped $25.67, their biggest one-day gain in six years, and closed at $94.11.

"They really knocked the cover off the ball," said Jennifer Chao, an analyst at Deutsche Bank.

United Therapeutics's lead product is Remodulin, which treats the rare condition of dangerously high blood pressure in arteries between the heart and lungs. The current formulation of the drug needs to be constantly infused into the body either intravenously or via an injection under the skin. It is an annoying and often painful treatment.

With the new form of Remodulin, called Viveta, patients would inhale the drug four times a day for a few minutes. "This is what we would call a paradigm shift," Chao said.

In the final stage of testing, patients were measured by how far they could walk for six minutes without the new treatment. Then they were given the drug and measured again after 12 weeks. The median additional distance patients were able to walk was 20 meters, surpassing the statistical hurdle the company agreed to with the FDA.

"These are amazing results," said Martine Rothblatt, the company's chief executive. "We are just absolutely elated." While 20 meters may not seem like a lot, Rothblatt, whose daughter suffers from the disease, said it is a huge difference to patients with the disease. "These patients cannot walk up one flight of steps," she said.

Phil Nadeau, an analyst at Cowen and Co., said: "At the end of the day, they have a real drug and it's going to be widely used."

United Therapeutics must apply for approval with the FDA. It has competition for its new drug, from an inhaled treatment called Ventavis that is marketed by Actelion Pharmaceuticals, a California drug company.

However, analysts said inhaled Remodulin, or Viveta, had a better treatment profile than Ventavis, which needs to be taken six to nine times a day for more than 15 minutes. "There are serious drawbacks," compared with Viveta, Chao said.

The biggest question for United Therapeutics is what comes next.

The company is clearly on a roll, racking in a third-quarter profit of nearly $15 million (66 cents a share) and revenue of $59 million , compared with profit of $8.5 million (34 cents) and revenue of $40.9 million in the same period a year ago.

Now it also has an innovative product that has been successfully tested. Nadeau and Chao think the company is a buyout target. Big drug companies are desperate for new products. "They are absolutely now marked for takeout," Chao said.

Rothblatt demurred, saying the company "was seriously committed to staying independent." She said that the firm had two other drugs in the final stage of testing -- a treatment for ovarian cancer and an oral form of Remodulin.

Positive results could make the company worth even more than it is today, she said, making it "irrational" to sell.