(By Balachander) United Therapeutics Corp. (NASDAQ: UTHR) shares tumbled over 15 percent on Wednesday after after the U.S. Food and Drug Administration (FDA) declined to approve its new drug application (NDA) for oral treprostinil as a treatment for pulmonary arterial hypertension (PAH).
In its letter, the FDA questioned the clinical importance of the six- minute walk distance (6MWD) improvement of 23 meters in FREEDOM-M, the inability to confirm the 6MWD benefit in the two FREEDOM-C studies and the inability to demonstrate improvement in time to clinical worsening in all phase 3 trials.
In a conference call, the company indicated that it would persevere toward gaining oral treprostinil approval with recent initiation of the FREEDOM-EV study but that timelines for data were likely extended to 2H16.
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BMO Capital Markets downgraded its rating on UTHR to "Market Perform" from "Outperform" and reducing its price target to $50.
Given the uncertainty of oral treprostinil approvability and extended timelines for clinical worsening data from FREEDOM-EV, we have removed the product's contribution from our financial estimates," the brokerage said.
"While Remodulin IV and Tyvaso formulations of treprostinil continue to show modest growth, the emergence of newer oral agents macitentan and riociguat could delay the time to prostacyclin therapy," BMO wrote.
"Finally, with oral tresprostinil as a key offset to potential generic Remodulin risk in late 2014 we believe that risk to estimates has increased following the FDA CRL," the brokerage said. "At current levels we advise a wait-and-see approach to existing product trends and timelines for FREEDOM-EV completion before recommending UTHR shares."
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Shares plunged 13.80 percent to trade at $45.92 on Wednesday. In the past 52-weeks, the stock has been trading between $38.93 and $59.00.