United Therapeutics shares tumbled Wednesday after the No. 2 biotech company and IBD 50 stock widely missed June-quarter earnings expectations.
The biotech company earned an adjusted $5.85 per share, up 12% year over year but below expectations for $6.48 a share, according to FactSet. Sales also climbed 20% to $714.9 million, topping the Street call for $692 million.
United Therapeutics' bread-and-butter drug is Tyvaso, a treatment for pulmonary arterial hypertension and pulmonary hypertension associated with interstitial disease. The former is a type of high blood pressure in the lungs. The latter is a serious lung disease. But sales of nebulized Tyvaso missed forecasts, though revenue from the bigger dry-powder inhaler formulation, or DPI, topped expectations.
"Although top-line performance exceeded expectations, we anticipate that some investors will focus on the elevated (research and development) spend, and the fact that nebulized Tyvaso revenues seem slightly lower in the second quarter vs. the first quarter than expected while Tyvaso DPI continues its robust uptake," Leerink Partners analyst Roanna Ruiz said in a report.
On today's stock market, United Therapeutics stock skidded 7.2% to 313.29, well off its intraday high at 343.98, achieved July 25. Shares land on the IBD 50 list of elite growth stocks.
United Therapeutics Leads In Pulmonary Hypertension
Revenue from Tyvaso climbed 25% to $398.2 million. But that lagged forecasts for $403.3 million. The entire miss stemmed from the nebulized formulation, which brought in $139.9 million in sales, but lagged calls for $150.9 million. The DPI formulation brought in $258.3 million in sales, just ahead of expectations for $257.1 million.
Ruiz kept her outperform rating on United Therapeutics stock.
"Increased use of Tyvaso DPI in pulmonary arterial hypertension and deeper penetration into the second (newer) indication of pulmonary hypertension with interstitial lung disease should solidify Tyvaso's overall ramp toward $1.5 billion-plus revenues in fiscal year 2024, in our view," she said.
She noted Merck recently launched its pulmonary arterial hypertension treatment, Winrevair. So far, Winrevair sales haven't pressured Tyvaso DPI. Winrevair generated $70 million in June-quarter sales, beating expectations for $56.5 million.
"All in, we think United Therapeutics should remain well-positioned for longer-term growth and is showing a potentially strong Tyvaso run-rate coming out of the second quarter, as they further strengthen their footprint as the leading company in pulmonary hypertension," Ruiz said.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
