United Therapeutics Earnings: Demand for Tyvaso DPI Drives Strong Sales; Shares Fairly Valued

United Therapeutics UTHR reported strong third-quarter results highlighted by revenue of $609 million, representing growth of 18% year over year. Tyvaso DPI, a dry powder inhaler for the treatment of pulmonary arterial hypertension, or PAH, launched in June 2022 and has continued to see strong patient demand. We maintain our fair value estimate of $221 per share, and we view shares as fairly valued, currently trading in 3-star territory.

Total Tyvaso sales were $326 million, representing 53% of quarterly sales. 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.

We forecast about $2.3 billion in total revenue for 2023, representing growth of about 20% over 2022. We expect declining sales later in our 10-year forecast period caused by pricing pressure, generic entry, and branded competition negatively affecting United Therapeutics’ drugs.

United’s no-moat rating is due to its concentration in PAH, 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 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. While United Therapeutics’ pipeline is making progress, it is largely in the early stages of development. As the company continues to face sales declines in its key products, the risks of potential missteps in clinical trials or poor product launches becomes magnified. These factors contribute to our High Uncertainty Rating.