By Kim Coghill

Washington Editor

United Therapeutics Corp.'s stock plunged 62 percent Monday after the company released anticipated revenues much lower than analysts had previously estimated for UTC's proposed subcutaneous treatment for pulmonary arterial hypertension.

UTC said partial first-year revenues in 2001 for the product, UT-15 (Uniprost), should be between $10 million and $20 million, much lower than the $80 million that analysts had expected.

In the same release, the company said its two co-founders, James Crow and Gilles Cloutier, will retire in mid-2001 following the FDA's approval of UT-15, an orphan drug. The Cardiovascular and Renal Drugs Advisory Committee will review the new drug application Feb. 9, and analysts predict the drug is on track for a spring approval.

Crow, the president and chief operating officer, will be succeeded by Roger Jeffs, currently vice president for clinical, scientific and medical affairs. In retirement, Crow will serve as president emeritus. Cloutier, currently executive vice president for business development, will serve as a consultant.

The announcements late Friday sent the stock into a downward spiral Monday morning.

"You can't put a press release out like this and then say nothing, and expect the market to do anything but crush your stock," said Craig West, biotech analyst with A.G. Edwards & Sons Inc., in St. Louis.

Although the first-year revenues of $10 million to $20 million are partial, West said, "everybody knew that. What wasn't known was that the patient numbers they were expecting are quite a bit lower. It begs the question of what is going on in some of the trials they have ongoing. Management isn't providing any color, there's no detail and they didn't elect to have a conference call. With this kind of market, obviously people are going to subscribe to the negative sentiment because of the lack of information."

The UT-15 open-label study includes 500 patients, half of the company's 1,000 target.

Kevin Tang, senior biotech analyst with New York-based Deutsche Banc Alex.Brown, said in a statement the most significant factor in the shortfall (of patients) may be competition from other investigational drugs, in particular Actelion Ltd.'s Tracleer (bosentan).

Referring to a prepared statement, Therese Fergo, UTC director of finance and investor relations, said the company's "internal goal is to have 1,000 patients on UT-15 by the end of 2001, of which at least 500 would be based in the United States, and twice as many patients by the end of 2002."

Regarding lower-than-expected revenues, she told BioWorld Today, "We never comment on stock market fluctuations or analysts' reports. This is our first disclosure. We are basing information on the data that we have. This is our understanding of what our revenues are going to be and we never had any earlier disclosures of revenue before."

Tang said UT-15 was expected to generate $80 million its first year and $170 million in its second (2002). His new estimates dropped to $13 million for 2001, and $46 million for 2002.

Comparatively, in a prepared statement, Martine Rothblatt, UTC chairman and CEO, said the company expects worldwide revenues of $75 million to $100 million by the end of 2002. UTC will seek approval in foreign nations - country by country - upon FDA approval.

U-15 is an analogue of prostacyclin, a molecule produced naturally within the body to keep blood vessels healthy. People with pulmonary arterial hypertension have reduced levels of prostacyclin within the blood vessels in their lungs, resulting in dizziness, fainting, diminished exercise ability and potentially right heart failure.

UTC submitted its NDA for UT-15 Oct. 16 and was granted six-month priority review status.

During the next 12 to 18 months, West said investors will begin to see some financial indication of the expected success and marketability of UT-15.

"We know that the product they are developing will work," West said. "So there's some reason we think to hold onto your shares. But you have to be very patient and you have to be very risk-tolerant."

Tang said Deutsche Bank downgraded its investment rating to "market perform" based on what is believed to be a two-year delay to profitability. He pointed out, however, that UTC's Phase III trial of Beraprost, which already sells approximately $300 million annually in Japan, is on track for completion by the end of 2001 and UTC has about $230 million in cash on the balance sheet.

UTC has survived past stock drops, albeit not so severe. In July the company's stock dropped 7.6 percent following a negative report from another analyst based on information that UTC's two Phase III trials of Uniprost failed separately to meet their endpoints. (See BioWorld Today, July 17, 2000.)

UTC said the report was based on a misperception about the study.

UTC remains in its second Phase III trial of Beraprost, an oral formulation of prostacyclin used in patients with peripheral vascular disease. The condition is characterized by pain in the lower legs, cramps, muscle ache or severe fatigue upon exercising believed to result from inadequate blood flow to the lower limbs. (See BioWorld Today, Oct. 17, 2000; Feb. 2, 2000; and March 28, 2000.)