Monday December 4, 1:56 pm Eastern Time
Morningstar.com
Stay Away from United Therapeutics
By Emily Hall
What Happened?
The market destroyed United Therapeutics (Nasdaq: UTHR - news) on Monday, sending the stock down about 63% in intraday
trading. The sell-off was driven by Friday's innocuously titled press release: ``United Therapeutics Plans Expected Transition to
Commercial Operations.'' In the announcement, however, the company indicated that sales of its flagship Uniprost, which is expected to be approved by the Food
and Drug Administration early in 2001, would probably total $10-$20 million in the product's first year on the market--much lower than earlier estimates. The
release also said United's chief operating officer, James Crow, and its executive vice president for business development, Gilles Cloutier, would both be leaving early
next year.
What it Means for Investors
Although we love bargains in the biotech sector, we believe that United Therapeutics has too many lingering questions to make it a compelling pick right now.
The double whammy of downward revenue projections and the loss of two executives makes United Therapeutics unappealing. The company is facing some serious
potential competitors in the pulmonary hypertension market, such as Swiss biotech firm Actelion. On the bright side, United does have two other products,
Beraprost and Ketotop, in late-stage human trials, but at this point it's not clear that these products can offset the lost revenue from a potentially
slow-growing Uniprost. Thus, we believe investors are better off looking elsewhere at present.
Emily Hall can be reached at emily_hall@morningstar.com.
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