United Therapeutics (UTHR) is a biotechnology company that was founded by Dr. Martine Rothblatt with the intent of finding a cure for her daughter’s rare condition, explains Tony Sagami, editor of Weiss Ultimate Portfolio.
The problem with rare conditions is that the market has historically been too small for solutions to be worth pursing. United Therapeutics found that it can make huge profits by expanding the use of so-called orphan drugs to other diseases.
As a result, the company has uncovered novel, life-extending therapies for lung disease, oncology, vascular diseases and novel pharmaceutical therapies, which have expanded the use of transplantable organs.
For example, UTHR has partnered with 3D Systems (DDD) to produce 3D-printed human lung cells. These are the most complex 3D-printed objects ever, consisting of a record 44 trillion voxels that use a patient’s own stem cells to create transplantable human lungs that don’t require immunosuppression drugs to prevent rejection.
In short, United Therapeutics is on cusp of “creating an unlimited supply of transplantable organs” for people with lung disease. The company currently has four primary drugs:
1. Tyvaso: A groundbreaking drug that dilates arteries and lowers blood pressure in the artery that leads from the heart to the lungs. Popularity is soaring — the drug is currently used to treat 4,400 patients and is expected to reach 6,000 by the end of the year. According to COO Michael Benkowitz, 25,000 patients will be using it by 2025.
2. Remodulin: Used to treat pulmonary arterial hypertension — it’s specifically used for the lungs of people with high blood pressure.
3. Orenitram: Opens blood vessels, which makes it easier for a patient’s heart to pump blood through their lungs.
4. Unituxin: Used to treat neuroblastoma — a rare cancer of the nervous system in children.
Business booming! In Q1 of 2022, UTHR reported revenue of $461.9 million, a 22% year-over-year increase and $50 million above the $411 million Wall Street expected.
Profits soared to $5.02 per share, an amazing 822% year-over-year increase from the 61 cents it made during the same periods last year and smashing the $2.96 Wall Street expected. Oh yeah, United Therapeutics has $3.8 billion — or $50.06 per share — of cash in the bank.
The future is even brighter. UTHR has seven more drugs in Phase 3 studies and will soon add to its expanding portfolio of rapidly growing drugs. And United Therapeutics’ stock is a bargain, trading for only 15 times forward earnings. Remember, it just reported a 822% year-over-year increase in revenue.
Why so cheap? Biotech stocks have been among the hardest hit this year as the Nasdaq had its worst six-month start in history. Look no further than the SPDR S&P Biotech ETF (XBI), which is down 33% so far this year.
United Therapeutics reports its quarterly results on Aug. 2, and Wall Street’s expecting $4.13 per share of profits. Another gangbuster quarter will send it much, much higher. Buy United Therapeutics at the market. Then place a protective stop at $204.
