GILD Gilead Sciences Inc

United Therapeutics Corporation (UTHR) received a major setback with a late stage study (FREEDOM-C2) of its pipeline candidate oral treprostinilnot meeting the primary endpoint, sending its share price down. FREEDOM-C2 was combination therapy study, which was examining oral treprostinil in combination with PDE-5 inhibitors or endothelin receptor agonists. It was a 16 week randomized double-blind, placebo-controlled trial in 310 patients with PAH, a life threatening illness.

Preliminary data showed that oral treprostinil did not achieve statistical significance for its primary endpoint of change in six-minute walk distance (6MWD) at 16 weeks. At week 16, the median difference between the oral treprostinil and placebo groups was 10 meters with regard to the primary efficacy analysis of placebo corrected change in 6MWD, which was statistically insignificant. Moreover, United Therapeutics said that no significant difference between oral treprostinil and placebo was observed in several secondary efficacy measures like change in Borg Dyspnea Score rating, change in Dyspnea Fatigue Index, change in WHO functional class, time to clinical worsening and PAH signs and symptoms.

United Therapeutics had presented positive data from another late stage study (FREEDOM-M) which evaluated oral treprostinil as a monotherapy for PAH in June 2011. Management now hopes to get oral treprostinil approved on the basis of data from the FREEDOM-M trial. The new drug application is expected to be filed in the first half of 2012.

Preliminary data from FREEDOM-M showed that oral treprostinil met its primary endpoint of change in 6MWD at 12 weeks. Patients in the oral treprostinil arm improved their median 6MWD by about 23 meters compared to patients on placebo. While the median change from baseline in the oral treprostinil group was 25 meters, the change was -5 meters for placebo at week 12.

Treprostinil is already available in an injectable form under the trade name Remodulin and an inhaled version under the trade name Tyvaso. Oral treprostinil, if approved, will bring a major upside to the existing business. However, we consider failure of oral Remodulin to achieve its primary endpoint in the FREEDOM-C2 study is a major setback for the company. We note that oral treprostinil had earlier failed to achieve statistical significance in another late stage study (FREEDOM C).

Currently available therapies in the PAH market include products like Gilead’s (GILD) Letairis and Pfizer’s (PFE) Revatio among others.

Our Recommendation

We currently have a Neutral recommendation on United Therapeutics. The stock carries a Zacks #2 Rank tantamount to a short-term Buy rating.

The company is well positioned to gain share in the PAH market. Lead product, Remodulin, continues to look very strong in both the intravenous and subcutaneous form.  With the approval of Adcirca (PAH) and Tyvaso, the company now has a varied range of therapies available for the treatment of PAH. We believe the company’s PAH product portfolio will drive strong top-and bottom-line growth. However, the failure of the FREEDOM-C2 trial concerns us. Failure of two trials for oral treprostinil makes the approvability of the candidate risky, though not impossible. We therefore prefer to remain on the sidelines.

 
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