What drove the revenue increase in 2007?

The filing attributes the increase of approximately $51.3 million primarily to growth in sales of Remodulin to distributors, reflecting an increase in the number of patients being treated with Remodulin.

Why did net income fall sharply in 2007?

Net income fell to $19.9 million from $74.0 million mainly because the 2006 results included a $34.1 million income tax benefit, versus $3.3 million in 2007. Operating expenses also rose sharply, with selling, general and administrative expense up to $99.0 million and R&D up to $83.4 million, including a $11.0 million charge from issuing shares to Toray.

What is the status of inhaled and oral treprostinil?

Inhaled treprostinil completed the TRIUMPH-1 trial, with an NDA filing expected by mid-2008 and commercial sales expected in 2009 if approved. Oral treprostinil is in Phase III FREEDOM-C and FREEDOM-M trials, with FREEDOM-C expected to be unblinded in late 2008 and approval filing expected in 2009.

What risks are associated with the Convertible Notes?

The $250.0 million 0.50% Convertible Senior Notes due October 2011 became convertible by holders because the stock price exceeded the threshold, so they are now classified as short-term debt. At least a portion of repayment must be made in cash, and the company says that failure to have sufficient financial resources could negatively affect product development.

What are the main risks around Remodulin's safety and supply?

The filing notes that sepsis is a risk associated with intravenous Remodulin and that the CDC inquiry led to the FDA revising the package insert in February 2008. The company also relies on third-party manufacturers and distributors, and it closed its Chicago facility in May 2007 while validating the new Silver Spring facility, for which FDA approval is expected in 2008.

UTHR 10-K FY2007 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed February 29, 2008. Cited figures are marked; the original filing is the authoritative source.

United Therapeutics Corporation's annual report for fiscal 2007 shows revenue of $210.9 million^a, up from $159.6 million in 2006, driven mainly by growth in Remodulin sales to distributors as more patients were treated with the drug.

Remodulin accounted for 95% of total 2007 revenues, and net income fell to $19.9 million^b from $73.97 million in 2006, with diluted EPS of $0.88 versus $3.06. Operating income dropped to $6.3 million from $29.0 million as selling, general and administrative expenses rose to $99.0 million, including $36.4 million of stock option expense, and R&D rose to $83.4 million. The pipeline had mixed results.

The TRIUMPH-1 Phase III trial of inhaled treprostinil showed a median six-minute walk improvement of approximately 20 meters versus placebo, and the company plans to file a New Drug Application by mid-2008. The IMPACT I and II Phase III trials of OvaRex failed to reach statistical significance, and the company is ceasing development of that antibody platform. The two Phase III FREEDOM trials of oral treprostinil are ongoing, with the FREEDOM-C interim data expected to be unblinded in late 2008.

Balance sheet items warrant attention. The $250.0 million^c 0.50% Convertible Senior Notes due 2011 are now classified as current liabilities because holders can convert them, which reduced working capital to $79.7 million from $258.1 million.

The company also reported $299.3 million^d in cash, cash equivalents and marketable investments, plus $44.2 million of restricted amounts. Its Silver Spring laboratory is financed through an off-balance-sheet synthetic lease, and new construction projects in North Carolina and Maryland are expected to cost approximately $107.1 million and $106.1 million, respectively.

02—Key points

Key Highlights

Revenue rose to $210.9 million in 2007 from $159.6 million in 2006, with Remodulin providing 95% of total revenues.
Net income declined to $19.9 million ($0.88 diluted EPS) from $74.0 million ($3.06 diluted EPS) in 2006, while income from operations fell to $6.3 million from $29.0 million.
Selling, general and administrative expense rose to $99.0 million from $56.1 million, including $36.4 million of stock option expense; R&D expense rose to $83.4 million from $57.6 million.
TRIUMPH-1 Phase III trial of inhaled treprostinil showed an approximately 20-meter median improvement in six-minute walk distance versus placebo; NDA filing is planned by mid-2008.
IMPACT I and II Phase III trials of OvaRex failed to reach statistical significance, and the company is terminating the related AltaRex license and ceasing development of that antibody platform.
The $250.0 million Convertible Notes are classified as current debt, reducing working capital to $79.7 million from $258.1 million at year-end 2006.

03—Questions

Frequently Asked Questions

What drove the revenue increase in 2007?
The filing attributes the increase of approximately $51.3 million primarily to growth in sales of Remodulin to distributors, reflecting an increase in the number of patients being treated with Remodulin.
Why did net income fall sharply in 2007?
Net income fell to $19.9 million from $74.0 million mainly because the 2006 results included a $34.1 million income tax benefit, versus $3.3 million in 2007. Operating expenses also rose sharply, with selling, general and administrative expense up to $99.0 million and R&D up to $83.4 million, including a $11.0 million charge from issuing shares to Toray.
What is the status of inhaled and oral treprostinil?
Inhaled treprostinil completed the TRIUMPH-1 trial, with an NDA filing expected by mid-2008 and commercial sales expected in 2009 if approved. Oral treprostinil is in Phase III FREEDOM-C and FREEDOM-M trials, with FREEDOM-C expected to be unblinded in late 2008 and approval filing expected in 2009.
What risks are associated with the Convertible Notes?
The $250.0 million 0.50% Convertible Senior Notes due October 2011 became convertible by holders because the stock price exceeded the threshold, so they are now classified as short-term debt. At least a portion of repayment must be made in cash, and the company says that failure to have sufficient financial resources could negatively affect product development.
What are the main risks around Remodulin's safety and supply?
The filing notes that sepsis is a risk associated with intravenous Remodulin and that the CDC inquiry led to the FDA revising the package insert in February 2008. The company also relies on third-party manufacturers and distributors, and it closed its Chicago facility in May 2007 while validating the new Silver Spring facility, for which FDA approval is expected in 2008.

04—Continue

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