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United Therapeutics of Silver Spring isn't your typical biotech.
For one thing, it's quite profitable, as its third-quarter net income climbed to $11.9 million from $11.0 million a year ago, with quarterly revenues approaching $100 million.
For another, it has defied convention during the economic slowdown by refusing to cut back on its clinical trials, conduct less risky trials or outsource them to clinical research organizations or overseas to save money.
"Our strategy has not changed much at all over the company's life," said Andrew Fisher, senior vice president of investor relations for the 400-employee company, which went public 10 years ago.
"We have always utilized internal and external resources to conduct our trials," Fisher said. "We rarely outsource a trial to a CRO. And, we rarely go it alone with our internal resources. There is usually a good balance."
"We are the No. 1 company in terms of growth on that metric, greater than 30 percent revenue growth each year," Fisher said. "I think any biotech company would be envious of that metric and honestly there are not that many profitable biotech companies out there. We have done so as a profitable company."
The biotech has put practically all its eggs into one pharmaceutical basket: treatments for pulmonary arterial hypertension, a rare disorder characterized by continuous high blood pressure in the pulmonary artery in the lungs that afflicts about 30,000 Americans.
United has a history of solid funding and it pours "a vast amount" of its profits into clinical trials and research, Fisher said.
Its resources allow United to stage its clinical trials — more than eight currently — to have potential products in all phases at all times, he said.
Joseph Schwartz, an analyst with Leerink Swann, said he expects United to outperform his estimates for sales based on its third-quarter report. He also noted that although expenses were "more than we or the Street expected," and United plans to spend more on selling, general and administrative costs and research and development to fund future growth, "sales should increase at faster pace."
Zacks Consensus Estimate reported that United's profit of 21 cents per share in the third quarter was well below its expected 31 cents, as higher operating expenses cut into profits.
"We believe the company is well-positioned to gain share in the pulmonary hypertension, which has players such as Gilead, Pfizer and GlaxoSmithKline," Zacks reported.
Cash is key
"We have way more cash than it takes to conduct the trials," Fisher said. "It is not unusual to have a lot more cash than is needed for clinical trials. In the early days, prior to going public especially, we had to be more mindful of cash balances. But we were well-funded pre-IPO."
United has maintained a steady cash level of $100 million to $200 million since 2000, according to its filings with the Securities and Exchange Commission. The company's market cap is $2.4 billion.
While many other biotechs in the region were launched by former pharmaceutical executives or scientists, United's founder, Martine A. Rothblatt, is a lawyer, author and satellite telecommunications veteran who co-founded Sirius Satellite Radio and WorldSpace.
She decided to enter the drug industry to find a cure or treatment for her 10-year-old daughter, Jenesis, who was diagnosed with pulmonary arterial hypertension in 1993.
Rothblatt purchased the compound that's now sold as Remodulin from GlaxoSmithKline for just $25,000 in 1997, and made initial investments to get United off the ground before it went public.
The company focuses on making life easier for patients, said Rothblatt, its CEO and chairman, in an Oct. 29 conference call with investors.
"Our goal is to continue to develop better and better products until we can confer pulmonary hypertension to a chronic lifetime manageable condition," she said.
"When we first got approval for Remodulin [in 2002], there were only 2,000 to 3,000 patients finding therapy," said John M. Ferrari, treasurer and vice president of finance.
"What we have seen in the marketing effort of Pfizer and Accredo [Therapeutics] is that people have become more aware of it, more people have been diagnosed, and we have followed up with selling them the drug," Ferrari said.
‘Not a drug discovery company'
United is also somewhat atypical in its drug development strategy, as then-CFO Frederick T. Hadeed told The Gazette a few years ago.
"We enter the timeline almost at the end. We are not a drug discovery company," Hadeed said. "We find drugs that have been tested in humans in a late stage. We in-license those drugs and get them approved."
That strategy has led to success for other biotechs nationwide, said Edward M. Rudnic, a former biotech executive and now chairman of the Tech Council of Maryland.
But United has made it work as well as anyone, Fisher said, as in-licensing remains king at United.
After a poor final trial of its pill form of Remodulin, United immediately licensed rights to Eli Lilly's erectile dysfunction drug, Cialis, for treatment of pulmonary arterial hypertension a year ago. That product, now marketed as Adcirca, is expected to compete with Pfizer's Revatio, which is Viagra repackaged for PAH. Both drugs work by increasing blood flow.
A single focus
United is also unusual in that it was preoccupied with hunting down ways to treat a highly complex and mysterious disease, PAH, for its entire first decade.
The disease is rare in its purest deadly form and physicians don't routinely test for it.
"The problem is that there is no blood pressure cuff for the pulmonary artery, so you often don't know how sick someone is until it's very serious," said Dr. John Berger, who has treated children with the ailment at Children's National Medical Center in Washington, D.C., since 2004.
"The thing about pulmonary hypertension is that if you catch it early, it is like regular hypertension," Berger said. "And you don't get sick from it until your organs start to feel it [and] you get a stroke or heart attack. Well, pulmonary hypertension is the same way. In the early stages of the disease, the only way we can tell you have it is to measure your pulmonary artery pressure."
Ironically, Ferrari said, as more PAH products are marketed, the more difficult it is to recruit patients for clinical trials, forcing United to conduct more trials in other countries.
"If there are five therapies for pulmonary hypertension here in the U.S., how do you convince a patient to forgo one of those marketable therapies to go into a clinical trial where they might end up getting a placebo instead of an active drug?" Ferrari asked. "That's not always true in these foreign countries where there are not as many therapies approved for the disease [and] therefore there may be more patients available."
The company is expanding trials beyond PAH to other treatments in the cardiopulmonary area, Fisher said.
"We want to do what we have done for pulmonary hypertension in other disease areas," he said. "As the company continues to grow, we hope to find other areas of unmet medical needs we can help with. We want to find these orphan conditions where patients are suffering and treatment options available to them are few and limited, and find ways to improve their lives."
The company plans to complete trials on an oral form of Remodulin next year and market it in 2012. United also sells cardiac monitors for arrhythmia and heart disease. It has more drugs in development for PAH and for brain cancer, including neuroblastoma.
The company's success, Fisher said, stems from the fact that "from the top down [it] is and always has been focused on doing the right thing for patients."
