On November 1, 2023 United Therapeutics Corporation (Nasdaq: UTHR), a public benefit corporation, reported its financial results for the quarter ended September 30, 2023 (Press release, United Therapeutics, NOV 1, 2023, View Source [SID1234636659]). Total revenues in the third quarter of 2023 grew 18% year-over-year to $609.4 million, compared to $516.0 million in the third quarter of 2022.
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"It’s a testament to our innovative research and commercial execution that we are again reporting record quarterly revenue and double-digit revenue growth," said Martine Rothblatt, Ph.D., Chairperson and Chief Executive Officer. "On top of our record results, we continue to progress our near-term pipeline with the ongoing TETON 1 and TETON 2 studies of nebulized Tyvaso in idiopathic pulmonary fibrosis and the ADVANCE OUTCOMES study of ralinepag in pulmonary arterial hypertension, both of which could generate data in 2025."
"With over $600 million in quarterly revenue, we’re well on our way to achieving our expected $4 billion annual run rate by mid-decade," said Michael Benkowitz, President and Chief Operating Officer. "Our commercial teams achieved meaningful growth in all of our key products, and our recent field force expansion in PH-ILD will help us build on this momentum."
Third Quarter 2023 Financial Results
Key financial highlights include (dollars in millions, except per share data):
Three Months Ended
September 30,
Dollar
Change
Percentage
Change
2023
2022
Total revenues
$
609.4
$
516.0
$
93.4
18
%
Net income
$
267.6
$
239.3
$
28.3
12
%
Net income, per basic share
$
5.71
$
5.26
$
0.45
9
%
Net income, per diluted share
$
5.38
$
4.91
$
0.47
10
%
Revenues
The table below presents the components of total revenues (dollars in millions):
Three Months Ended
September 30,
Dollar
Change
Percentage
Change
2023
2022
Net product sales:
Tyvaso DPI(1)
$
205.1
$
63.1
$
142.0
225
%
Nebulized Tyvaso(1)
120.7
194.6
(73.9
)
(38
)%
Total Tyvaso
325.8
257.7
68.1
26
%
Remodulin(2)
131.1
114.0
17.1
15
%
Orenitram
92.0
87.5
4.5
5
%
Unituxin
51.3
46.1
5.2
11
%
Adcirca
7.3
10.7
(3.4
)
(32
)%
Other
1.9
—
1.9
NM
(3)
Total revenues
$
609.4
$
516.0
$
93.4
18
%
(1)
Net product sales include both the drug product and the respective inhalation device.
(2)
Net product sales include sales of infusion devices, such as the Remunity Pump.
(3)
Calculation is not meaningful.
Net product sales of our treprostinil-based products (Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram) grew by $89.7 million, or 20%, for the third quarter of 2023, as compared to the third quarter of 2022. The growth in total Tyvaso revenues resulted primarily from an increase in total quantities sold driven by the commercial launch of Tyvaso DPI in June 2022 and continued growth in utilization by patients with pulmonary hypertension associated with interstitial lung disease (PH-ILD). The growth in Tyvaso DPI revenues resulted from an increase in quantities sold. The decrease in nebulized Tyvaso revenues resulted primarily from a decrease in quantities sold following the commercial launch of Tyvaso DPI. The increase in Remodulin revenues resulted from an increase in quantities sold.
Expenses
Cost of sales. The table below summarizes cost of sales by major category (dollars in millions):
Three Months Ended
September 30,
Dollar
Change
Percentage
Change
2023
2022
Category:
Cost of sales
$
69.1
$
37.1
$
32.0
86
%
Share-based compensation expense(1)
1.0
0.1
0.9
900
%
Total cost of sales
$
70.1
$
37.2
$
32.9
88
%
(1)
Refer to Share-based compensation below.
Cost of sales, excluding share-based compensation. Cost of sales for the three months ended September 30, 2023 increased as compared to the same period in 2022, primarily due to an increase in Tyvaso DPI royalty expense and product costs following its commercial launch in June 2022.
Research and development expense. The table below summarizes the nature of research and development expense by major expense category (dollars in millions):
Three Months Ended
September 30,
Dollar
Change
Percentage
Change
2023
2022
Category:
External research and development(1)
$
47.2
$
37.6
$
9.6
26
%
Internal research and development(2)
34.3
29.1
5.2
18
%
Share-based compensation expense(3)
3.6
2.0
1.6
80
%
Impairments(4)
—
—
—
—
%
Other(5)
(0.4
)
(2.6
)
2.2
85
%
Total research and development expense
$
84.7
$
66.1
$
18.6
28
%
(1)
External research and development primarily includes fees paid to third parties (such as clinical trial sites, contract research organizations, and contract laboratories) for preclinical and clinical studies and payments to third-party contract manufacturers before FDA approval of the relevant product.
(2)
Internal research and development primarily includes salary-related expenses for research and development functions, internal costs to manufacture product candidates before FDA approval, and internal facilities-related expenses, including depreciation, related to research and development activities.
(3)
Refer to Share-based compensation below.
(4)
Impairments primarily includes impairment charges to write down the carrying value of in-process research and development and of certain property, plant, and equipment as a result of research and development activities. There were no impairment charges during the three months ended September 30, 2023 and September 30, 2022.
(5)
Other primarily includes upfront fees and milestone payments to third parties under license agreements related to development-stage products and adjustments to the fair value of our contingent consideration obligations.
Research and development expense, excluding share-based compensation. Research and development expense for the three months ended September 30, 2023 increased as compared to the same period in 2022, primarily due to increased expenditures related to: (1) the TETON 1 and TETON 2 clinical studies of nebulized Tyvaso in patients with idiopathic pulmonary fibrosis; and (2) organ manufacturing projects.
Selling, general, and administrative expense. The table below summarizes selling, general, and administrative expense by major category (dollars in millions):
Three Months Ended
September 30,
Dollar
Change
Percentage
Change
2023
2022
Category:
General and administrative
$
90.4
$
85.7
$
4.7
5
%
Sales and marketing
20.7
17.2
3.5
20
%
Share-based compensation expense (benefit)(1)
16.5
(4.5
)
21.0
467
%
Total selling, general, and administrative expense
$
127.6
$
98.4
$
29.2
30
%
(1)
Refer to Share-based compensation below.
Share-based compensation. The table below summarizes share-based compensation expense (benefit) by major category (dollars in millions):
Three Months Ended
September 30,
Dollar
Change
Percentage
Change
2023
2022
Category:
Stock options
$
6.0
$
5.7
$
0.3
5
%
Restricted stock units
12.5
9.9
2.6
26
%
Share tracking awards plan (STAP)
2.1
(18.5
)
20.6
111
%
Employee stock purchase plan
0.5
0.5
—
—
%
Total share-based compensation expense (benefit)
$
21.1
$
(2.4
)
$
23.5
979
%
The increase in share-based compensation expense for the three months ended September 30, 2023, as compared to the same period in 2022, was primarily due to an increase in STAP expense driven by a two percent increase in our stock price for the three months ended September 30, 2023, as compared to an 11 percent decrease in our stock price for the same period in 2022.
Income tax expense. Income tax expense for the three months ended September 30, 2023 and 2022 was $84.2 million and $73.2 million, respectively. Our effective income tax rate for the three months ended September 30, 2023 and 2022 was 24 percent and 23 percent, respectively.
Inducement Restricted Stock Units
On October 30, 2023, we granted a total of 23,483 restricted stock units under our 2019 Inducement Stock Incentive Plan to 16 newly hired employees. One of the grants will vest in three equal installments on the third, fourth, and fifth anniversaries of the grant date on October 30, 2026, October 30, 2027, and October 30, 2028. All other grants cliff vest fully on the third anniversary of the grant date on October 30, 2026. These restricted stock unit grants assume continued employment on such dates, and are subject to the standard terms and conditions we filed with the SEC as Exhibit 10.2 to our Current Report on Form 8-K on March 1, 2019. We are providing this information in accordance with Nasdaq Listing Rule 5635(c)(4).
Webcast
We will host a webcast to discuss our third quarter 2023 financial results on Wednesday, November 1, 2023, at 9:00 a.m. Eastern Time. The webcast can be accessed live via our website at View Source A replay of the webcast will also be available at the same location on our website approximately 12 hours after the conclusion of the call.