Analysts at Oppenheimer tempered their expectations for United Therapeutics Corp’s (NASDAQ:UTHR) first-quarter citing the Maryland-based biotech’s historic propensity to log seasonally slow sales during the start of the year.
“If there is a negative reaction to an expected seasonally soft quarter for United Therapeutics, we would take advantage of any weakness,” wrote Oppenheimer analysts Hartaj Singh and Emma Nealon in a note to clients.
The analysts reached a US$180 price target for United Therapeutics, which was trading at US$110 on Tuesday before the opening bell.
On Monday, United Therapeutics reached a deal to acquire Israel-based SteadyMed Therapeutics Inc. in a deal potentially valued at US$216mln, a move that eliminates a serious competitive threat to the Maryland biotech by literally pulling the speciality pharma company into its own corner.
“We applaud the purchase of SteadyMed Limited (NASDAQ:STDY), which potentially adds another pump to the Remodulin armamentarium and removes recent patent risk from an IPR loss. We stay bullish,” the Oppenheimer analysts wrote.
Both SteadyMed and United Therapeutics have anchored their portfolios with drugs that treat pulmonary arterial hypertension.
The Washington Business Journal reported that SteadyMed and United Therapeutics have been “locked in years-long litigation” centered on Treyvent and its main ingredient, treprostinil, the same active ingredient in three of United Therapeutics’ products: Remodulin, Tyvaso and Orenitram.
The drugs made up 71% of United’s US$1.73bn in total revenue last year.
READ: SteadyMed surges in pre-market on buyout by United Therapeutics
The analysts wrote that while the SteadyMed purchase is not material to United in the short term, the purchase does add another pump “delivery system for Remodulin.”
Oppenheimer expects United Therapeutics to “report a seasonally slow” first quarter when it reports earnings on Wednesday before market open.
“Historically, 1Q has been the slowest quarter for sales and earnings for UTHR, due to adjustment to sales for rebates, discounts, payments to patient assistance programmes and Part D Donut hole coverage payments,” wrote the Oppenheimer analysts.
According to the analysts, the first quarter of every year tends to be seasonally slow for “large-cap biotech companies broadly,” accounting for 23% of sales for the year (over the last 10 years).