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Press Release

Press Release

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July 31, 2007 / 7:00 AM ET

United Therapeutics Reports Second Quarter 2007 Financial Results

SILVER SPRING, Md., July 31 /PRNewswire-FirstCall/ -- United Therapeutics Corporation (Nasdaq: UTHR) today announced financial results for the quarter ended June 30, 2007.

"We are pleased to report that United Therapeutics has surpassed $50 million in quarterly revenues for the second quarter. Net income for the quarter was $5.8 million, or $0.28 per basic share," said Martine Rothblatt, Ph.D., United Therapeutics' Chairman and Chief Executive Officer.

Financial Results

Revenues grew to $51.8 million in the second quarter of 2007, as compared to $40.2 million in the second quarter of 2006. Gross margins from sales were $45.8 million in the second quarter of 2007, as compared to $36.0 million in the second quarter of 2006. The increases in revenues and gross margins resulted primarily from growth in sales of Remodulin. Net income was $5.8 million or $0.28 per basic share in the second quarter of 2007, as compared to net income of $7.7 million or $0.33 per basic share in the second quarter of 2006.

    Research and development expenses consist primarily of salaries and
related expenses, costs to acquire pharmaceutical products and product rights
for development, and amounts paid to contract research organizations,
hospitals and laboratories for the provision of services and materials for
drug development and clinical trials. The table below summarizes research and
development by major project and non-project components (dollars in

                                        Three Months Ended
                                            June 30,               Percentage
                                       2007            2006          Change
    Project and non-project:
     Cardiovascular                   $9,269          $6,596          40.5 %
     Cancer                            4,061           2,462          65.0 %
     Infectious disease                  200             180          11.1 %
     Stock option                      2,981           2,173          37.2 %
     Other                             1,459           1,203          21.3 %
       Total research and
        development expense          $17,970         $12,614          42.5 %

The increase in expenses for our cardiovascular program was primarily attributable to our oral and inhaled projects, each of which required approximately $1.5 million more expenses over the same period in 2006. The increase in expenses for the cancer program was primarily related to the development of the manufacturing process for OvaRex(R) in our Silver Spring, Maryland, facility.

Selling, general and administrative expenses consist primarily of salaries, travel, office expenses, insurance, professional fees, provision for doubtful accounts receivable, depreciation and amortization. The table below summarizes selling, general and administrative expenses by major categories (dollars in thousands):

                                        Three Months Ended
                                             June 30,              Percentage
                                       2007            2006          Change
     General and administrative       $9,066          $6,465          40.2 %

     Sales and marketing               5,708           3,361          69.8 %

     Stock option                      5,700           2,045         178.7 %

       Total selling, general and
        administrative expense       $20,474         $11,871          72.5 %

The increase in general and administrative expenses was due primarily to increased expenses of approximately $1.1 million of salaries and related expenses from headcount growth to support our expanding operations. The increase in sales and marketing related expenses was primarily due to an increase in salaries and related expenses of approximately $1.8 million due to an increase in headcount to support our Remodulin sales growth. The increase in stock option expense of approximately $3.7 million represents increased non-cash employee stock option expense and accruals.

An income tax expense of approximately $3.1 million was recognized for the three months ended June 30, 2007, as compared to approximately $6.2 million for the three months ended June 30, 2006. The income tax provision was based on the estimated annual effective tax rate for the entire year. The estimated effective tax rate is subject to adjustment in subsequent quarterly periods as the estimates of pre-tax income for the year are adjusted. The effective tax rate for the six months ended June 30, 2007 and 2006, was approximately 35 percent and 44 percent, respectively. However, we do not anticipate paying significant federal income taxes for 2007 due to the availability of $38.5 million of net operating loss carryforwards and $50.3 million of research tax credits.

During the six months ended June 30, 2006, we recognized a non-cash and non-recurring charge of $2.0 million for the impairment of the HeartBar(R) tradename. During the six months ended June 30, 2007, we issued 200,000 shares of our common stock to Toray in connection with an amended license agreement for modified release beraprost. The issuance of shares resulted in an $11.0 million non-recurring expense because the licensed product has not yet obtained regulatory approval for commercial sales. If these non-cash, non- recurring items were not recognized during the six-month periods ending June 30, 2007 and 2006, respectively, pro forma net income would have been as follows (in thousands, except per share data):

                                                     Six Months Ended June 30,
                                                       2007           2006
    Net income, as reported                           $3,025         $9,980
    Add back:
     Impairment of HeartBar tradename                      -          2,024
     License fee from issuance of stock               11,013              -
    Less tax effect of non-recurring item             (3,905)          (898)
    Pro forma net income                             $10,133        $11,106

    Earnings per share, as reported:
     Basic                                             $0.14          $0.42
     Diluted                                           $0.14          $0.39

    Pro forma earnings per share(1):
     Basic                                             $0.48          $0.47
     Diluted                                           $0.46          $0.43

    (1) Calculated by dividing pro forma net income from above by weighted
        average shares outstanding, as reported below.

                               Conference Call

United Therapeutics will host a half-hour teleconference on Tuesday, July 31, 2007, at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing 1-800-603-1777, with international callers dialing 1-706-679-8129. A rebroadcast of the teleconference will be available for one week following the teleconference by dialing 1-800-642-1687, with international callers dialing 1-706-645-9291, and using access code 10881078.

This teleconference is also being web cast and can be accessed via United Therapeutics' web site at

United Therapeutics is a biotechnology company focused on the development and commercialization of unique products for patients with chronic and life- threatening cardiovascular, cancer and infectious diseases.

In addition to historical information, this press release contains forward-looking statements about expectations and intentions regarding the payment of federal and state income taxes for 2007, the generation of taxable income, the availability and utilization of net operating loss carryforwards to reduce taxable income, the availability and utilization of research tax credits to pay income taxes, and the ability to pursue both stock repurchase and drug development programs that are based on our current beliefs and expectations as to future outcomes. These expectations are subject to risks and uncertainties, such as those described in our periodic reports filed with the Securities and Exchange Commission, which may cause actual results to differ materially from anticipated results. Consequently, such forward-looking statements are qualified by the cautionary statements, cautionary language and risk factors set forth in our periodic reports and documents filed with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We are providing this information as of July 31, 2007, and undertake no obligation to publicly update or revise the information contained in this press release whether as a result of new information, future events or any other reason. [uthr-g]

                    (In thousands, except per share data)

                            Three Months Ended        Six Months Ended
                                 June 30,                  June 30,
                             2007         2006         2007         2006
                                (Unaudited)               (Unaudited)

     Net product sales      $49,381      $38,750      $87,788      $70,370
     Service sales            1,783        1,495        3,545        3,039
     Distributor fees           667         ----          667         ----
       Total revenues        51,831       40,245       92,000       73,409

    Operating expenses:
     Research and
      development            17,970       12,614       35,071       27,314
     Research and
      development expense
      related to issuance
      of stock                 ----         ----       11,013         ----
     Selling, general and
      administrative         20,474       11,871       35,638       21,950
     Impairment of
      HeartBar(R) tradename    ----         ----         ----        2,024
     Cost of product sales    4,791        3,745        8,606        7,091
     Cost of service sales      551          499        1,132        1,030
       Total operating
        expenses             43,786       28,729       91,460       59,409
       Income from
        operations            8,045       11,516          540       14,000

    Other income (expense):
     Interest income          1,938        2,485        5,983        4,383
     Interest expense          (713)          (1)      (1,424)          (1)
     Equity loss in affiliate   (79)        (171)        (193)        (378)
     Other, net                (279)           5         (220)          15
       Total other income,
        net                     867        2,318        4,146        4,019
    Income before
     income tax               8,912       13,834        4,686       18,019
    Income tax expense       (3,106)      (6,161)      (1,661)      (8,039)
    Net income               $5,806       $7,673       $3,025       $9,980

    Net income per
     common share:
      Basic                   $0.28        $0.33        $0.14        $0.42
      Diluted                 $0.26        $0.30        $0.14        $0.39

    Weighted average number
     of common shares
      Basic                  20,837       23,591       21,069       23,483
      Diluted                22,020       25,344       22,219       25,577

                             As of June 30, 2007
                          (Unaudited, In thousands)

    Cash, cash equivalents and marketable investments
     (including restricted amounts of $38,459)           $     280,272
    Total assets                                         $     471,794
    Total liabilities                                    $     281,911
    Total stockholders' equity                           $     179,001

SOURCE United Therapeutics Corporation

Contact: Andrew Fisher of United Therapeutics Corporation, +1-202-483-7000,

Dewey Steadman, (202) 919-4097,