United Therapeutics jumps on FDA approval


Biotechnology company United Therapeutics Corp. (UTHR) announced today it has received a Food and Drug Administration approval for Adcirca, once-a-day 40 mg tablets for the treatment of pulmonary arterial hypertension (PAH).

PAH is a progressive, life-threatening disease in which the pressure in a patient's pulmonary arteries rises to dangerously high levels, putting a strain on the heart. It can cause shortness of breath, chest pain and eventually heart failure. The disease is more common in women. While there is no cure, there are a number of treatments that aim to reduce symptoms, improve quality of life, slow disease progression and prolong life. Adcirca is now one of them.

United Therapeutics thanked the Eli Lilly & Co. (LLY) clinical development efforts. Why Eli Lilly? Well, in November 2008, United Therapeutics acquired the U.S marketing rights for the PAH indication of tadalafil from Eli Lilly for $150 million. Tadalafil is the active ingredient in Adcirca; it is als the active ingredient in Cialis. Cialis is marketed by Lilly for erectile dysfuntion (impotence).

Now UTHR is working to leverage Lilly's network in the U.S. to market Adcirca. It expects to launch the drug commercially in the U.S. at the beginning of August. Lilly retains commercialization rights to tadalafil for PAH outside of the U.S.

Adcirca is estimated to have $150 to $250 million in peak sales potential for the company, but this won't be easy. As you might have guessed, if Cialis can be used for this application, so can Pfizer Inc.'s (PFE) Viagra. Indeed, Pfizer's PAH drug Revatio has the same ingredient as Viagra and has $150 million a year in sales. Other competitors are Actelion Ltd.'s Tracleer and Gilead Sciences Inc.'s (GILD) Letairis.

But on the conference call, Chairman and CEO Martine Rothblatt said that with its efficacy -- Adcirca is at least comparable to other drugs on the market and showed considerable improvement over the placebo group, convenience -- it's a once a day drug vs. three times a day, safety -- no black boxing or adverse side effect, and economy -- price point could be chear -- that Adcirca could be a game changer.

This means Adcirca might be able to grab market share from existing drugs as UTHR believes that with its favorable label it would become the first therapy.

UTHR shares this morning jumped over 10 percent, or $7.30, to $73.82.