GILD Gilead Sciences Inc

United Therapeutics Corporation (UTHR) is facing a patent challenge for its lead product, Remodulin (treprostinil) injection. Sandoz, Novartis’ (NVS) generic unit, is seeking approval for its generic version of Remodulin (10 mg/mL).

The Paragraph IV Certification Notice Letter was received from Sandoz on Feb 3, 2012. Sandoz has filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA) for its generic version of Remodulin.

Sandoz is challenging three patents – one that expires in October 2014, another that expires in October 2017 and a third that expires in March 2029. According to Sandoz, all these patents are invalid, not enforceable and will not be infringed by Sandoz’ product.

Remodulin, the key revenue generator at United Therapeutics, accounts for more than 55% of sales – the entry of generic competition would, therefore, be a major blow to the company. In such a scenario, we believe United Therapeutics will leave no stone unturned in its efforts to delay the entry of generics.

We believe United Therapeutics will file a patent infringement lawsuit against Sandoz within 45 days so that Sandoz’s product cannot receive FDA approval until a court rules in Sandoz’ favor or for up to 30 months, whichever comes earlier. Remodulin sales totaled $320 million in the first nine months of 2011.

Neutral on United Therapeutics

We currently have a Neutral recommendation on United Therapeutics, which carries a Zacks #3 Rank (short term “Hold” rating). The company is well-positioned to gain share in the pulmonary arterial hypertension (PAH) market. Remodulin continues to look very strong in both the intravenous (IV) and subcutaneous (SC) forms.

With the approval of Adcirca and Tyvaso, United Therapeutics 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.

United Therapeutics’ competitors in the PAH market include companies like Gilead (GILD) and Pfizer (PFE) among others. We believe competition will continue to increase with several companies working on bringing additional therapies to the market.

 
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