By Randall Osborne

West Coast Editor

First, the "good" news.

United Therapeutics Corp. (UTC) said it has definitive agreements to raise $143 million through a private placement of common stock - 1.3 million shares at $110 each, more than triple the $32 share price six months ago, when the company hauled down $80 million by selling stock to institutional investors. (See BioWorld Today, Dec. 27, 1999, p. 1.)

Deutsche Banc Alex. Brown served as placement agent. UTC had 18.57 million shares outstanding before the sale.

"The bottom line is, we've delivered on our business plan," said Fred Hadded, chief financial officer of Silver Spring, Md.-based UTC. "We did everything we told the investors in the initial public offering that we would do, and we added to our pipeline."

Now, the "bad" news.

UTC's shares (NASDAQ:UTHR) dropped $9.437 Friday, or 7.6 percent, closing at $115.06 - after rebounding in the afternoon - following a report by analyst Rob Toth, of Prudential Vector Securities Inc. in San Francisco, who downgraded the stock from "strong buy" to "accumulate."

Toth said he based the downgrade on new information that UTC's two Phase III trials of its hypertension drug, Uniprost, failed separately to meet their primary endpoints.

"It was the easiest call I ever made," he said. "The stock was already trading at my target price."

Formerly known as UT-15, Uniprost is a stable structural analogue of the naturally occurring molecule prostacyclin, levels of which are low in the lung blood vessels of people with pulmonary hypertension.

In the spring, UTC reported positive early data from the pair of Uniprost trials, considered together. (See BioWorld Today, March 28, 2000, p. 1.)

More recently, during its road show, the company acknowledged that the studies' preliminary outcomes are different when examined separately. UTC officials "met with all of our big investors and gave them an update," Hadded said. "Word travels."

When word reached Toth, he wrote his report downgrading the stock and, by coincidence, released it the same day the financing was disclosed.

"We still believe that Uniprost can receive FDA approval and are retaining our $129 target, but Wall Street may be more skeptical of the approval until it occurs," Toth wrote.

UTC "never told me this [placement] was coming," he said. "They could have given me the opportunity to pull my call."

Would he have done that?

"No," he said. "This was more a near-term valuation than anything else. I haven't changed my price target, or any estimates, or my outlook that this drug will get approved. I don't want to bash the stock, but I'm telling my investors that I have companies with drugs in Phase III [trials] that I feel pretty good about, that offer a more compelling 12-month opportunity."

UTC, Toth added, "is going to be in business a lot longer than 12 months. It's a good story."

Hadded said the FDA, in meetings with UTH about the Uniprost trials, "gave us two ways to win" - that is, by evaluating results from the pair of studies separately or together.

Toth said he didn't know this, and could not recall another case where the FDA permitted it.

UTH opted to consider the trials' data together, Hadded said, although doing so meant a "higher hurdle" statistically. Toth agreed the standard is "more rigorous," but said investors are likely not to understand.

"This will keep the stock from going up appreciably in the near term," Toth said.

"I was the first guy to peg this stock at over $100," he added. "I did not want to kill the stock with my call. It wasn't what I was out to do."

But he conceded the Wall Street reaction was more severe than might normally be expected after a large private placement.

"I've got to believe it was due to information highlighted in my report," Toth said.

Aside from the positive Uniprost data, plenty of good news has come out of the company between its December financing and the more recent stock sale, which is expected to close in five days.

UTC has bought 15 percent of Synergy Pharmaceuticals Inc. (along with which came exclusive rights to antivirals, and an option to buy the rest of the firm), and has acquired North American rights to sustained-release formulations of the oral prostacyclin, Beraprost, being tested in Phase III studies for early stage peripheral vascular disease and early stage pulmonary hypertension. (See BioWorld Today, April 3, 2000, p.1; and June 30, 2000, p. 1.)

Hadded said UTC will file a new drug application for Uniprost "within a month," and will present detailed data from the Phase III trials for the first time at the end of August, at a scientific conference in Amsterdam.

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