Milestone Payment for Supernus - Analyst Blog

Several pharma/biotech companies collaborate for the development and commercialization of products. These collaborations make sense as they allow the companies to bring together their expertise, technical knowhow and resources. Where financial terms are concerned, these agreements are typically structured to include an upfront payment and additional payments on the achievement of milestones besides royalties.

Earlier this week, Supernus Pharmaceuticals, Inc. SUPN announced that it has received a milestone payment of $2 million from partner United Therapeutics Corp. UTHR for the launch of Orenitram (treprostinil) extended-release tablets. Supernus will also receive royalties on net sales of Orenitram and additional payments on the achievement of certain milestones.

We note that Orenitram was developed by United Therapeutics using Supernus' patented technology platform. It was approved in Dec 2013 for the treatment of pulmonary arterial hypertension (PAH) patients (in World Health Organization (WHO) Group I) for improving their exercise capacity. The product was launched in Apr 2014.

We note that subcutaneous and intravenous formulations of Orenitram are already available under the trade name Remodulin for the treatment of PAH.

Orenitram has orphan drug status in the EU for the treatment of PAH. An application for orphan drug designation for Orenitram is under the U.S. Food and Drug Administration's (FDA) review.

The milestone payment of $2 million received by Supernus will add to the company's topline. In 2014, Supernus expects revenues in the range of $75 million−$85 million. The Zacks Consensus Estimate for revenues of $80 million is within this guidance range.

Supernus carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Mallinckrodt plc MNK and Akorn, Inc. AKRX. While Mallinckrodt carries a Zacks Rank #1 (Strong Buy), Akorn holds a Zacks Rank #2 (Buy).