UPDATE 3-United Therapeutics' oral PAH drug fails trial

(Adds analysts' comments, updates stock movement)

By Esha Dey

BANGALORE, Nov 17 (Reuters) - United Therapeutics Corp (UTHR.O) said a late-stage trial of its experimental oral treatment for pulmonary arterial hypertension (PAH) failed to meet the main goal of the study, sending its shares tumbling 36 percent to a new year-low.

The drug being tested is an oral formulation of Remodulin, a hormone present in the human body that is classified as prostacyclin. Injectable Remodulin is already approved for PAH, a condition that causes high blood pressure in vessels connecting the lungs to the heart.

Ladenburg Thalmann & Co analyst Matthew Kaplan said the investors were looking for an oral version of prostacyclin as its other forms are very tough to administer.

Prostacyclin is usually used in the sickest of PAH patients and an oral version of the drug could be used in early treatment, Kaplan said.

However, analysts are still positive on oral Remodulin and they believe the main reason for the "disappointing" data was that about one-third of the patients failed to reach the required therapeutic dose.

Monday's data also means that the drug's approval gets pushed further away.

"Had this trial and the next succeeded, they probably could have submitted for approval sometime mid-year next year," Cowen and Co analyst Philip Nadeau said. "But now they are talking about submitting for approval late in 2010. So, it's probably done an eighteen months delay."

The company, which expects data from the second late-stage trial of the oral drug to be available at the end of March, is still reviewing the preliminary results and safety data, including adverse events.

An inhaled version of the same drug is currently under review by the U.S. health regulators with an expected action date in April.

J.P. Morgan Securities' analyst Geoffrey Meacham said oral Remodulin could ultimately double the size of the PAH opportunity for the company.

EXPANDING PAH FRANCHISE

United Therapeutics also said on Monday it acquired the rights to market Eli Lilly and Co's (LLY.N) tadalafil in the United States for the treatment of PAH.

According to the terms, United Therapeutics will pay $150 million to Eli Lilly for the U.S. marketing rights, and a product manufacturing and supply arrangement.

Tadalafil, which is currently under regulatory review in the United States, Canada, Mexico, Japan and the European Union for PAH, is already approved for the treatment of erectile dysfunction under the brand name Cialis.

"They already have products approved or in the pipeline for later-stage treatments, and Cialis is a frontline treatment. So, now they have drugs throughout the whole continuum of the disease," Ladenburg's Kaplan said.

Additionally, Eli Lilly would also buy $150 million of United Therapeutics' common stock.

J.P. Morgan's Meacham, who reiterated his "overweight" rating on United Therapeutics, said the Eli Lilly deal shows the interest of large pharma companies in the PAH space. Shares of United Therapeutics were trading down $32.47 at $58.05 in midday trade on Nasdaq. They had touched a low of $56.29 earlier in the day. (Editing by Amitha Rajan, Anil D'Silva)