$1 Billion Sales Target in Place for Tyvaso



Tyvaso’s annual sales

While United Therapeutics’ (UTHR) Tyvaso is currently generating annual sales of less than $0.5 billion, its strong profile and patent protection until the late 2020s is expected to enable it to reach an annual sales figure of $1 billion.

With its strong portfolio of pulmonary arterial hypertension (or PAH) drugs targeted at all stages of the disease, United Therapeutics poses strong competition to other PAH players such as Gilead Sciences (GILD), GlaxoSmithKline (GSK), and Teva Pharmaceutical (TEVA).

If Tyvaso manages to reach its revenue target, it will have a positive impact on United Therapeutics’ share price as well as the price of the SPDR S&P Biotech ETF (XBI). United Therapeutics makes up around 2.5% of XBI’s total portfolio holdings.

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Increased efficacy

Tyvaso, combined with oral prostacyclin analogue esuberaprost (also called Tyesuberaprost), is currently being tested in the BEAT Phase 3 trial for patients suffering from Group 1 PAH. This trial is ~80% complete and will release most of its results in late 2016.

United Therapeutics expects the trial to demonstrate that the combination therapy results in a significant fall in morbidity and mortality faced by PAH patients. If this projection proves correct, it will boost Tyvaso’s sales.

PAH Group 3

While multiple drugs are currently available for Group 1 PAH, there’s no drug currently being marketed for Group 3 PAH. Tyvaso is currently being tested to target this unmet demand.

In its 2Q16 earnings transcript, United Therapeutics explained Group 1 PAH as a disease in which patients have “pressures in the pulmonary artery up over 10 times the normal level.” The company claims that this has been a more attractive segment, as it’s been far easier to develop a therapy.

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However, Groups 2, 3, 4, and 5 PAH are also expected to offer significant growth opportunities. The overall patient count for these groups exceeds that of those suffering from Group 1 PAH. These patients also suffer from higher pulmonary artery pressure in the range of two to three times the normal level. These levels are known to cause disability and death and thus require urgent medication. If Tyvaso demonstrates efficacy and safety as a therapy for Group 3 PAH, its addressable market size will significantly increase.

Inhaled drug

Tyvaso expects to benefit from being an inhaled drug when treating Group 3 PAH. According to United Therapeutics’ 2Q16 earnings transcript, “Group 3 pulmonary hypertension is pulmonary hypertension associated with IPF, or idiopathic pulmonary fibrosis, or COPD, chronic obstructive pulmonary disease.”

This disease cannot be treated by drugs that are administered either orally or by infusion or injection in blood, as this results in a complication called a V/Q mismatch. Hence, only inhaled therapy can be used for Group 3 PAH.

According to verywell.com, “V/Q mismatch means that in some areas of the lungs, the alveoli and capillaries don’t line up or there is dead space. This can mean that in some areas of the lung, there are more capillaries than alveoli, in other words areas in the lungs that are better perfused by blood than ventilated. In other areas there may be more alveoli with fresh oxygen than capillaries to pick up that oxygen. In other words, some areas of the lungs may be better ventilated than perfused.”

In the next article, we’ll explore United Therapeutics’ research pipeline in detail.


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