United Therapeutics Earnings: Robust Growth Thanks to Strong Tyvaso DPI Sales; Shares Fairly Valued

United Therapeutics UTHR reported robust second-quarter results highlighted by revenue of $597 million, representing growth of 28% year over year. Tyvaso DPI, which is a dry powder inhaler for the treatment of pulmonary arterial hypertension, was launched in June 2022 and has seen strong patient demand. We raised our fair value estimate to $221 per share from $213, primarily due to the time value of money since our last update. We view shares as fairly valued, currently trading in 3-star territory.

Tyvaso reported quarterly sales of $319 million, accounting for 53% of total sales. We forecast about $2.2 billion in total revenue for 2023, representing growth of about 15%. We continue to expect declining sales later in our 10-year forecast period due to pricing pressure, generic entry, and branded competition negatively affecting United Therapeutics’ drugs.

United’s no-moat rating is due to its concentration in pulmonary arterial hypertension and many of its approved therapies will face competition from generics over the next 10 years. The company largely relies on one active ingredient, treprostinil, which is used in three of its five marketed products (Remodulin, Tyvaso, and Orenitram) for the treatment of pulmonary arterial hypertension, or PAH. The company’s two other marketed drugs are Adcirca and Unituxin. Remodulin and Adcirca have already seen generic entry, and there are no patents covering Unituxin.

The original indication of Tyvaso received FDA approval in 2009, and management reached settlements in 2018 with generic manufacturers to delay the generic launches of Tyvaso and Orenitram until 2026 and 2027, respectively. We anticipate Tyvaso DPI will help offset some of the negative effects of generic entry, but we expect United Therapeutics’ competitive position in PAH will be challenged by branded competition. J&J’s Uptravi has quickly gained share since it received FDA approval in 2015, and it reported sales exceeding $1.3 billion in 2022.