Why United Therapeutics Corporation Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of United Therapeutics (NASDAQ: UTHR  ) , a biopharmaceutical company developing therapies to treat unmet diseases and disorders, popped as much as 26% after announcing the approval of Orenitram (previously treprostinil) -- an oral treatment for pulmonary arterial hypertension (PAH) -- by the Food and Drug Administration after the bell on Friday.

So what: According to United Thereapeutics' press release, the approval of Orenitram marks its fifth such indication to treat PAH. The approval followed a late-stage trial whereby patients who were administered Orenitram twice daily demonstrated a 23-meter improvement in walking distance over six minutes compared to the placebo. United Therapeutics ran two additional studies utilizing Orenitram, but noted that it "did not demonstrate a benefit in exercise with median 6MWD at Week 16."

Now what: Slowly but surely, United Therapeutics is building itself quite the array of products to treat PAH. Having such a wide array of therapies available could make it the go-to company for PAH treatments and also assure it strong pricing power for years to come. On the flipside, though, I still remain a bit concerned about the subpoena it received two weeks ago that requests documents related to the marketing practices of its three best-selling drugs. Sometimes these investigations turn up nothing or result in just a slap on the wrist. But I'd rather be safe than sorry and would suggest sticking to the sidelines after today's catapult higher.

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4/17/2014 3:59 PM
UTHR $96.20 Down -2.02 -2.06%
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