01—Abstract
Summary
Summary of the 10-K filed February 24, 2011. Cited figures are marked; the original filing is the authoritative source.
United Therapeutics Corporation is a biotechnology company focused on developing and commercializing products for chronic and life-threatening conditions.
Its lead product, Remodulin (treprostinil), generated $403.6 milliona, or 67% of 2010 net revenues. Tyvaso, approved by the FDA in July 2009 and launched in September 2009, contributed $151.8 million (25% of revenues), and Adcirca contributed $36.3 million (6%). Total revenues for 2010 were $603.8 million, up from $369.8 million in 2009, and the company reported 2010 net income of $105.9 million, or $1.78 per diluted share, compared with a 2009 net income of $19.5 million.
Cash, cash equivalents and marketable investments reached $759.9 millionb at December 31, 2010, versus $378.1 million a year earlier. The company also obtained a $70.0 million mortgage loan in December 2010 and has $250.0 million of Convertible Senior Notes maturing in October 2011, which it states it has the liquidity to repay. Key pipeline items include the FREEDOM-M and FREEDOM-C2 Phase III trials of oral treprostinil, with preliminary FREEDOM-M results expected in June 2011 and no NDA anticipated before 2012.
The company also agreed on February 7, 2011 to sell its telemedicine subsidiary Medicomp for $14.9 millionc in aggregate consideration, with closing expected in March or April 2011. Investors should note the filing's stated dependence on Remodulin and Tyvaso, reliance on third-party manufacturers and distributors, a single distributor accounting for 64% of 2010 consolidated revenues, the pending Lilly sale of approximately 3.1 million shares, and exposure to pricing and reimbursement pressures under the Patient Protection and Affordable Care Act.
02—Key points
Key Highlights
- Total revenues rose to $603.8 million in 2010 from $369.8 million in 2009, with Remodulin ($403.6 million), Tyvaso ($151.8 million) and Adcirca ($36.3 million) as the main contributors.
- Net income was $105.9 million ($1.78 diluted EPS) in 2010, compared with $19.5 million in 2009, and income from operations was $164.0 million.
- Cash, cash equivalents and marketable investments totaled $759.9 million at December 31, 2010, up from $378.1 million, aided by a $70.0 million mortgage loan.
- The $250.0 million Convertible Senior Notes mature in October 2011; the company states current liquidity is sufficient to repay them.
- FREEDOM-M Phase III trial of oral treprostinil completed enrollment with 349 patients in January 2011, with preliminary results expected in June 2011; an NDA is not anticipated until 2012.
- The Medicomp telemedicine subsidiary is being sold for $14.9 million in aggregate consideration, expected to close in March or April 2011, and a $6.2 million goodwill impairment was recorded for 2010.
- Lilly disclosed forward contracts to sell up to approximately 3.1 million shares of UTHR common stock during 2011, and the risk factors cite a single distributor as 64% of 2010 consolidated revenues.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, United Therapeutics kept $0.18.
- Revenue$592.9M100.0%
- Cost of revenue−$68.9M11.6%
- Gross profit$524.0M88.4%
- Operating costs−$352.7M59.5%
- Operating income$171.3M28.9%
- Interest, other & tax−$65.4M11.0%
- Net income$105.9M17.9%
Where FY2010 revenue went
$592.9M- SG&A: $188.6M, 32% of revenue
- R&D: $165.3M, 28% of revenue
- Net income: $105.9M, 18% of revenue
- Cost of revenue: $67.7M, 11% of revenue
- Interest, other & tax: $65.4M, 11% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 24, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $592.90M$358.88M | +65.2% |
| Cost of Revenue | $67.67M$40.86M | +65.6% |
| Gross Profit | $524.03M$316.77M | +65.4% |
| R&D Expenses | $165.31M$120.37M | +37.3% |
| SG&A Expenses | $188.61M$171.89M | +9.7% |
| Operating Expenses | $421.59M$333.12M | +26.6% |
| Operating Income | $171.31M$25.76M | +565.1% |
| Interest Expense | $19.71M$12.88M | +53.1% |
| Net Income | $105.92M$19.46M | +444.2% |
| EPS (Basic) | $1.89$0.37 | +410.8% |
| EPS (Diluted) | $1.78$0.35 | +408.6% |
| Shares Outstanding (Basic) | 56.14M53.31M | +5.3% |
| Shares Outstanding (Diluted) | 59.52M56.13M | +6.0% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue in 2010?
The filing attributes revenue growth mainly to a rise in the number of patients prescribed the company's products, along with price increases of 9.6% and 13.3% on Remodulin in the U.S. and international markets in March and April 2010, and a 4.9% increase on Tyvaso in November 2010. Those price increases added $25.9 million to revenue, of which $25.6 million related to Remodulin.
How much debt does United Therapeutics have and when is it due?
The company had $250.0 million principal of 0.50% Convertible Senior Notes maturing in October 2011, which are classified as current. It also took on a $70.0 million mortgage loan in December 2010, with a 48-month term maturing in December 2014. Total debt was reported at $304.9 million at December 31, 2010.
What are the main risks tied to the company's commercial products?
The filing states that it is highly dependent on Remodulin and Tyvaso, that it relies on third parties for manufacturing and distribution (including Baxter, Hollister-Stier, Catalent and Lilly for Adcirca), and that Tyvaso carries post-marketing requirements whose failure could lead to penalties or market withdrawal. It also notes that pricing and reimbursement pressures and the Patient Protection and Affordable Care Act could affect sales.
What is the status of the oral treprostinil development program?
The FREEDOM-C trial did not reach statistical significance on its primary endpoint in November 2008. The company amended the FREEDOM-M protocol, completed enrollment with 349 patients, and expects preliminary results in June 2011. FREEDOM-C2 is expected to be fully enrolled in April 2011, with preliminary analysis expected in September 2011. The company does not anticipate filing an NDA until 2012.
06—Continue