United Therapeutics' 10-Q Suggests Dangerous Over-Reliance on Its Top Product

United Therapeutics Corp. derives almost all of its commercial sales from its top product Remodulin, a treatment for pulmonary arterial hypertension. In 2009, however, the biotechnology company could be drifting into troubled waters. For the six-months ended June 30, Remodulin accounted for approximately 95 percent of the $130.6 million in revenue, according to the second-quarter 10-Q filed on July 31. The company has enjoyed annual revenue growth in excess of 30 percent each year since Remodulin was approved in 2002. But other key therapeutic platforms, which treat infectious diseases and a variety of cancers, are still in early stages of development. As such, continued rapid growth is contingent upon the company expanding commercial development of its Remodulin platform from refractory treatment (in the sickest patients) to front-line therapy for newly diagnosed patients.

A concern exists, too, that United Therapeutics could lose pricing power over Remodulin. Two generic versions of Flolan IV (epoprostenol), the first product approved by the FDA for treating PAH back in 1996, are now available. Albeit the infusion pump for Remodulin is much smaller than that of Flolan -- and can be easily cloaked under clothing -- third-party payers usually are more interested in reimbursement costs, not convenience. On top of that, Actelion, Gilead, and Pfizer control six of the seven approved therapies for PAH in the United States. If the FDA roughs up United Therapeutics in clinical trials in the coming months, watch out.