On November 3, 2021 United Therapeutics Corporation (Nasdaq: UTHR), a public benefit corporation with a purpose to provide a brighter future for patients, reported its financial results for the quarter ended September 30, 2021 (Press release, United Therapeutics, NOV 3, 2021, View Source [SID1234594158]). Total revenue in the third quarter of 2021 grew 17% year over year to $444.7 million, compared to $380.1 million in the third quarter of 2020.
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"Our momentum continues with growing patient use of our medicines, which are delivered by infusion, inhalation, and tablets," said Martine Rothblatt, Ph.D., Chairperson and Chief Executive Officer of United Therapeutics. "I’m also very excited about the progress of our six phase 3 clinical trials across various forms of pulmonary hypertension and pulmonary fibrosis."
"We continue to add new Tyvaso patients following the approval in PH-ILD earlier this year, with approximately 4,000 U.S. patients on Tyvaso therapy at the end of the third quarter," said Michael Benkowitz, President and Chief Operating Officer of United Therapeutics. "Referrals for Tyvaso remain strong, and we’re well on our way toward our goal of reaching 6,000 U.S. patients on Tyvaso by the end of 2022."
THIRD QUARTER 2021 FINANCIAL RESULTS
Net product sales from our treprostinil-based products (Tyvaso, Remodulin, and Orenitram) grew by $46.1 million in the third quarter of 2021 compared to the third quarter of 2020. The growth in Tyvaso revenues resulted primarily from an increase in quantities sold, reflecting an increased number of patients following the pulmonary hypertension associated with interstitial lung disease (PH-ILD) label expansion. The growth in Orenitram revenues resulted from an increase in quantities sold, reflecting an increased number of patients and, to a lesser extent, a price increase. The growth in Unituxin revenues resulted from an increase in quantities sold and, to a lesser extent, price increases. Unituxin revenues in the third quarter of 2021 included $9.0 million related to the launch of Unituxin in Japan.
Expenses
Cost of product sales. The table below summarizes cost of product sales by major category (dollars in millions):
Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):
Selling, general, and administrative expense. The table below summarizes selling, general, and administrative expense by major category (dollars in millions):
General and administrative, excluding share-based compensation. The increase in general and administrative expense for the three months ended September 30, 2021, as compared to the same period in 2020, was primarily due to: (1) an increase in legal expenses related to litigation matters; and (2) an increase in consulting expenses.
Share-based compensation. The table below summarizes share-based compensation expense (benefit) by major category (dollars in millions):
The increase in share-based compensation expense for the three months ended September 30, 2021, as compared to the same period in 2020, was primarily due to an increase in STAP expense driven by a three percent increase in our stock price for the three months ended September 30, 2021, as compared to a 17 percent decrease in our stock price for the same period in 2020, partially offset by a decrease in stock option expense due to fewer awards granted and outstanding in 2021.
Other expense, net. The change in other expense, net, for the three months ended September 30, 2021, as compared to the same period in 2020, was primarily due to an increase in net unrealized losses on equity securities.
Income tax expense. Income tax expense for the three months ended September 30, 2021 and 2020, was $41.7 million and $47.8 million, respectively. The effective income tax rate (ETR) for the three months ended September 30, 2021 and 2020 was 20 percent and 22 percent, respectively. The ETR for the three months ended September 30, 2021 decreased compared to the ETR for the three months ended September 30, 2020 primarily due to a decrease in valuation allowance, partially offset by increases in blended state income tax rates.
Non-GAAP Earnings
Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation expense (benefit); (2) impairment charges; (3) unrealized gain on an investment in a privately-held company; (4) net changes in recurring fair value measurements; (5) license-related fees; (6) certain other costs incurred outside our normal course of business; and (7) tax impact on non-GAAP earnings adjustments.
A reconciliation of net income to non-GAAP earnings is presented below (in millions, except per share data):
PRODUCT COMMERCIALIZATION UPDATE
In 2021, we have launched one new product and one new product indication. In February 2021, we launched commercial sales of the Remunity Pump for Remodulin, and in April 2021, we launched a label expansion for Tyvaso to include an indication for PH-ILD following approval by the U.S. Food and Drug Administration (FDA) on March 31, 2021.
Remunity Pump for Remodulin. In February 2021, we launched sales of the Remunity Pump for Remodulin. The Remunity Pump is a pre-filled, semi-disposable system for subcutaneous delivery of treprostinil. The system consists of a small, lightweight, durable pump and separate controller. The pump uses disposable cartridges filled with Remodulin, which can be connected to the pump with less patient manipulation than is typically involved in filling other currently-available subcutaneous pumps.
Tyvaso Inhalation Solution in PH-ILD. The FDA approved Tyvaso for the PH-ILD indication on March 31, 2021, and we launched commercial efforts for the new indication shortly thereafter.
Tyvaso DPI. In April 2021, we submitted a new drug application (NDA) for Tyvaso DPI for pulmonary arterial hypertension (PAH) and PH-ILD indications. In October 2021 we received a complete response from the FDA noting a single deficiency preventing approval of Tyvaso DPI, related to an open inspection issue at a third-party facility that performs analytical testing of treprostinil drug substance. The FDA did not cite any deficiencies or issues related to operations performed at any United Therapeutics or MannKind Corporation facility for manufacturing, testing, and packaging of treprostinil drug substance, finished Tyvaso DPI drug product, or its associated device. All other requests from the agency have been addressed. We believe that the single deficiency identified in the complete response will be resolved quickly and that Tyvaso DPI can be approved by the summer of 2022, if not earlier.
Our Tyvaso DPI NDA includes the results of two clinical studies we conducted of Tyvaso DPI. One was a study in healthy volunteers, comparing the pharmacokinetics of Tyvaso DPI to Tyvaso Inhalation Solution. The study was completed in October 2020, and demonstrated comparable systemic treprostinil exposure between Tyvaso DPI and Tyvaso Inhalation Solution. In December 2020, we completed a clinical study (called BREEZE), which evaluated the safety and pharmacokinetics of switching PAH patients from Tyvaso Inhalation Solution to Tyvaso DPI. The BREEZE study demonstrated the safety and tolerability of Tyvaso DPI in subjects with PAH transitioning from Tyvaso Inhalation Solution, and comparable systemic treprostinil exposure between Tyvaso DPI and Tyvaso Inhalation Solution.
RESEARCH AND DEVELOPMENT UPDATE
Updates on select later-stage programs are below.
Tyvaso in chronic fibrosing interstitial lung diseases — TETON. We are enrolling a phase 3 study called TETON, which is a U.S. study of Tyvaso in patients with idiopathic pulmonary fibrosis (IPF). The primary endpoint of this study is the change in absolute forced vital capacity (FVC) from baseline to week 52. We are planning an additional phase 3 study of Tyvaso in IPF patients that will be similar to TETON, but will be conducted outside the United States.
The TETON program was prompted by data from the INCREASE study, which demonstrated improvements in certain key parameters of lung function in pulmonary hypertension patients with fibrotic lung disease. Specifically, in the INCREASE study, treatment with Tyvaso resulted in significant improvements in percent predicted FVC at weeks 8 and 16, with subjects having underlying etiologies of idiopathic interstitial pneumonias showing greater improvement. Consistent positive effects were also observed in patients with chronic hypersensitivity pneumonitis and environmental/occupational lung disease. These data points, combined with substantial preclinical evidence of antifibrotic activity of treprostinil, suggest that Tyvaso may offer a treatment option for patients with fibrotic lung disease.
Tyvaso in PH-COPD — PERFECT. Enrollment is ongoing for the phase 3 PERFECT study evaluating Tyvaso in patients with WHO Group 3 pulmonary hypertension associated with chronic obstructive pulmonary disease (PH-COPD). In a 30-week crossover study, 136 subjects will be randomized between inhaled treprostinil and placebo for a 26-week treatment period. The primary endpoint of the study is the change in 6MWD from baseline to week 12.
Ralinepag phase 3 clinical studies — ADVANCE CAPACITY and ADVANCE OUTCOMES. We are enrolling two phase 3 clinical studies to support the potential approval of oral ralinepag for PAH.
INDUCEMENT RESTRICTED STOCK UNITS
On October 29, 2021, we granted a total of 1,040 restricted stock units under our 2019 Inducement Stock Incentive Plan to five newly hired employees. These restricted stock units vest in three equal installments on October 31, 2022, 2023, and 2024, assuming 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 2021 financial results on Wednesday, November 3, 2021, 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.