01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
United Therapeutics Corporation's 2009 Form 10-K reports total revenues of $369.8 milliona for 2009, up from $281.5 million in 2008, with net income of $19.5 million ($0.35 diluted EPS) compared with a net loss of $49.3 million in 2008.
The 2008 loss reflected a $150.0 millionb one-time upfront fee paid to Eli Lilly and Company for commercial rights to Adcirca, which was expensed as research and development. Remodulin remained the core product, generating $331.6 million, or 90% of 2009 net revenues. Tyvaso, approved by the FDA in July 2009 and launched in September 2009, contributed $20.3 million, and Adcirca, approved in May 2009, contributed $5.8 million.
The company highlighted several regulatory and pipeline developments. The European Medicines Agency application for Tyvaso was withdrawn in February 2010 after findings of non-compliance with good clinical practice at two clinical sites. The oral treprostinil program was set back when the FREEDOM-C Phase III trial missed statistical significance in November 2008; the company added a lower-strength tablet to FREEDOM-M and started FREEDOM-C2, and does not anticipate filing an NDA before 2012.
The company also announced a 9.6% Remodulin list price increase effective March 25, 2010. Balance sheet items require attention. The $250.0 millionc 0.50% Convertible Senior Notes due October 2011 became convertible at holders' election at year-end 2009 and were reclassified to current liabilities, which turned working capital negative at $5.7 million.
Management expects most holders to keep the notes until maturity and cites approximately $214.6 milliond of working capital available for operating needs. Cash, cash equivalents and marketable investments totaled $378.1 million, and about $36.2 million par value of auction-rate securities remain illiquid, partly protected by a put option exercisable between June 30, 2010 and July 2, 2012.
02—Key points
Key Highlights
- Total revenues rose to $369.8 million in 2009 from $281.5 million in 2008, and the company returned to net income of $19.5 million, or $0.35 per diluted share.
- Remodulin generated $331.6 million, or 90% of 2009 net revenues, leaving the company highly dependent on a single product.
- Tyvaso (approved July 2009, launched September 2009) produced $20.3 million and Adcirca (approved May 2009) produced $5.8 million in their first partial year of sales.
- The EMA application for Tyvaso was withdrawn in February 2010 because of good clinical practice findings at two clinical sites; the EMA reported no major objections on safety or efficacy.
- Oral treprostinil's FREEDOM-C Phase III trial did not reach statistical significance; the company does not anticipate filing an NDA before 2012.
- Convertible Senior Notes of $250.0 million were reclassified to current liabilities, causing negative working capital of $5.7 million at December 31, 2009.
- Cash, cash equivalents and marketable investments totaled $378.1 million at year-end 2009, with a 9.6% Remodulin price increase planned for March 25, 2010.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, United Therapeutics kept $0.05.
- Revenue$358.9M100.0%
- Cost of revenue−$42.1M11.7%
- Gross profit$316.8M88.3%
- Operating costs−$291.0M81.1%
- Operating income$25.8M7.2%
- Interest, other & tax−$6.3M1.8%
- Net income$19.5M5.4%
Where FY2009 revenue went
$358.9M- SG&A: $171.9M, 48% of revenue
- R&D: $120.4M, 34% of revenue
- Net income: $19.5M, 5.4% of revenue
- Cost of revenue: $40.9M, 11% of revenue
- Interest, other & tax: $6.3M, 1.8% of revenue
Kept 5.4% as net incomeNet income $19.5M · 5.4%Interest, other & tax $6.3M · 1.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $358.88M$281.50M | +27.5% |
| Cost of Revenue | $40.86M$26.96M | +51.6% |
| Gross Profit | $316.77M$254.54M | +24.4% |
| R&D Expenses | $120.37M$239.18M | −49.7% |
| SG&A Expenses | $171.89M$94.31M | +82.3% |
| Operating Expenses | $333.12M$363.55M | −8.4% |
| Operating Income | $25.76M-$82.06M | +131.4% |
| Interest Expense | $12.88M$11.44M | +12.6% |
| Net Income | $19.46M-$49.33M | +139.5% |
| EPS (Basic) | $0.37$-1.08 | +134.3% |
| EPS (Diluted) | $0.35$-1.08 | +132.4% |
| Shares Outstanding (Basic) | 53.31M45.80M | +16.4% |
| Shares Outstanding (Diluted) | 56.13M45.80M | +22.6% |
05—Questions
Frequently Asked Questions
Why did United Therapeutics report a net loss in 2008 but net income in 2009?
The 2008 net loss of $49.3 million reflected a $150.0 million one-time upfront payment to Eli Lilly and Company for the Adcirca license, which was expensed as research and development because Adcirca had not yet received FDA approval. Revenues grew to $369.8 million in 2009 and research and development expense fell to $122.2 million, producing net income of $19.5 million.
How concentrated is the company's revenue?
Remodulin accounted for approximately 90% of 2009 net revenues. Net Remodulin sales in the United States to three distributors represented about 88% of Remodulin revenues, and one customer, Accredo Health Group, accounted for about 77% of total net domestic revenues in 2009.
What is the status of the Convertible Senior Notes?
The $250.0 million 0.50% Convertible Senior Notes due October 2011 became convertible at holders' election because the stock price exceeded 120% of the conversion price for 20 of the 30 trading days ending December 31, 2009, so they were classified as a current liability. Management expects most or all holders to hold the notes until maturity. Upon conversion, the company must pay the lesser of principal or conversion value in cash.
What are the main risks to the Tyvaso and oral treprostinil programs?
Tyvaso is subject to a post-marketing requirement to complete a long-term observational study, with results due by December 15, 2013, and a post-marketing commitment with a supplement due by October 31, 2010; failure could lead to penalties or withdrawal. The EMA application was withdrawn in February 2010. Oral treprostinil faces Phase III setbacks, with an FDA filing not expected before 2012.
06—Continue