JP Morgan is out defending United Therapeutics (NASDAQ:UTHR) after the phase III FREEDOM-C trial did not meet the primary endpoint of improvement in exercise capacity, as measured by the 6 minute walk distance (6MWD) in PAH patients receiving oral Remodulin in combination with Tracleer or Revatio over those receiving Tracleer/Revatio alone.

Firm recalls that the FREEDOM-C protocol was amended to allow dose titration with smaller steps through the introduction of 0.5mg and 0.25mg doses, it is possible that together with a positive FREEDOM-M trial (which has a lower bar of needing to beat only placebo) and the new FREEDOM-DR study with all patients having a easier dose titration, oral Remodulin could still achieve regulatory and commercial success. United’s conf call is at 9 am (800 603 1777 US) and JPM is hosting a conference call today at 11am ET with Dr. Jeremy Feldman, KOL and FREEDOM-C investigator to discuss the implications of the results (dial in forthcoming). Firm maintains their Overweight rating and believes that IV/SQ and inhaled Remodulin support a valuation > $70-75/sh and based on today’s FREEDOM-C results, they still believe that oral Remodulin has a path to market.

FREEDOM-M looks more likely to succeed. Improving the standard of care (FREEDOM-C) is a much more difficult clinical achievement than merely showing activity against placebo. The growth opportunity for the Remodulin franchise is likely as oral monotherapy in Class 2-3 patients; hence JPM believes the 6MWD improvement in the FREEDOM-M trial is an important dataset.

They believe oral Remodulin could ultimately double the size of the PAH opportunity for United.

Notablecalls: UTHR looks interesting as a bounce candidate. Very fast moving stock so adjust your risk accordingly. Havent heard from other firms yet. - FYI