United finds a seventh way to serve up treprostinil

Extending a pulmonary hypertension drug’s lifecycle could help battle generic erosion, but investors might have been looking for a more transformative deal.

The good news for United Therapeutics is that it has used some of its $1.8bn cash pile to expand its pipeline by licensing in a phase I asset. The bad news is that this asset has a familiar name: treprostinil.

The same active ingredient is already present in United’s marketed pulmonary arterial hypertension (PAH) products Tyvaso, Orenitram and Remodulin, and now a licence with the beleaguered group Mannkind gives United a dry-powder inhalation formulation. Perhaps United should be lauded for its focus on PAH, but a $45m deal for just another type of treprostinil makes the company look like it has an innovation deficit.

Mann United

United’s shares fell 3% yesterday after announcement of the deal, which would see Mannkind deliver a formulation that can be used with its inhalers, such as the Dreamboat device used with its inhalable insulin Afrezza. The project is in a phase I trial, but Mannkind's website states that it is phase III ready, presumably thanks to the active ingredient being approved.

The deal averts Mannkind's expected cash call as the group seeks to market Afrezza solo; its cash supply had dwindled to $26m as of June 30, and HC Wainwright analyst Oren Livnat had forecast a burn rate of $46m in the second half of 2018.

Thus, Mannkind’s shares shot up 75% yesterday – probably in part thanks to United taking over development costs of the dry powder treprostinil, which will allow the $45m up-front fee to be directed into sales and marketing for Afrezza. Mannkind's chief executive, Michael Castagna, said the cash would be used in part to “turn on” TV advertising again, as an example.

But, with just another $50m in development milestones in the offing and “low double-digit” sales royalties, Mannkind might not be able to count on this transaction to fund operations for long, and will need Afrezza sales to increase substantially.

United’s inability to excite its investors is likely down to the expectation that generic versions of Remodulin, an infused product, will begin making headway this year while lifecycle extensions like the company's recently approved implantable Remodulin pump will not offset the erosion. The Maryland-based group has clung to the belief that its patient support services will allow it to prevail over cheaper competitors, along with settlements that prevent generics from being used in United’s newer delivery devices.

Decline

This is not how analysts see the market shaping up, however. Remodulin sales are expected to fall by 7% a year in 2017-24, along with total company sales, according to EvaluatePharma’s consensus of sellside forecasts. Only one pipeline product is expected to add sales, this being the phase III esuberaprost, again for PAH, while marketed products Orenitram, a treprostinil tablet, and Unituxin for neuroblastoma, will also grow.

United outlook
    Global sales ($m)
Product Generic name 2018e 2020e 2022e 2024e
Remodulin Treprostinil sodium 630 488 431 390
Orenitram Treprostinil diolamine 228 283 293 296
Tyvaso Treprostinil sodium 395 261 178 161
Unituxin Dinutuximab 78 96 108 115
Esuberaprost Esuberaprost sodium - 11 38 72
Adcirca Tadalafil 172 37 8 6
Total 1,504 1,176 1,056 1,040
Source: EvaluatePharma.

Orenitram is a case where United was seeking to expand sales by showing a benefit in preventing death or PAH complications that would have put the product on a more even footing with Johnson & Johnson’s oral drugs Uptravi and Opsumit. However, the Freedom EV trial fell short in August, showing a reduction in events versus placebo of 26%, which was less than the 40% and 38% seen with Uptravi and Opsumit respectively.

Wainwright analyst Andrew Fein wrote recently that he doubted that United could generate the organic growth necessary to counterbalance the coming generic erosion, and suggested that it use its cash to acquire a near-market asset that it can shepherd through to approval. He suggested that it had stuck too closely to PAH, and that an orphan disease project should be considered.

United does not lack the cash to pull off such a deal. But until now it appears to have lacked the nerve.

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