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Nothing gets an investor wide-eyed like the prospect of jump starting his portfolio with a hot biotechnology stock that's reaching a boiling point. This is especially true if the jury is still out in regards to launching a new pharmaceutical in Phase III trials. Unfortunately, most promising drugs don't reach the light of day. As stated in a recent TheStreet Ratings Report:

An average drug takes about 10 to 15 years from pre-clinical development to market approval. According to the FDA, for every 20 drugs that enter the clinical testing stage, only a few pass trial and gain approval.".

Still, investors with a heavy gambling bent place significant bets on biotechnology companies that have never made a dime and have no products on the market. Why? I really don't know. It's a crap shoot. I prefer the companies to be profitable and have something for sale if I'm going to buy shares or keep an eye on them.

One biotechnology company that fits my criteria for inclusion on my watch list is United Therapeutics (NASDAQ:UTHR). It's been profitable since 2004 with plenty of products on the market and in the pipeline - some almost ready to hatch. United Therapeutics has had a nice run since the market crash in late 2008, early 2009, rising from $24/share to its current price of $65, but, you may not be late to the party if you haven't already invested in it.

If you aren't acquainted with United Therapeutics, they are a pure play in PAH (pulmonary arterial hypertension, or more commonly known as persistent high blood pressure). A recent Credit Suisse report explains that the global PAH population is estimated to be between 100,000-300,000 patients worldwide. This doesn't sound like a large number when compared to other maladies, but, in the arena in which United Therapeutics performs, there are not many treatment options available. They're king of the jungle.

When you consider that the medication is very costly, with a price tag greater than $100,000 per patient, you can see why the company is now in it's 9th year of its revenues growing by over 30% a year from the preceding year, as articulated by CEO Martine Rothblatt in the latest conference call. Not only has United Therapeutics grown in the past decade, but the PAH market has as well, starting at near zero in 2001 to $3 billion this past year.

Although United Therapeutics sells cardiac event monitors, for the purpose of this posting, I'm just concentrating on its product portfolio of controlled substances. Their main offering is Remodulin which can be administered intravenously or with a subcutaneous pump. Not very fun if you're the patient, but this packs the biggest punch in regards to efficacy. Second in the pecking order is Tyvaso which is is inhaled, and, lastly is Adrica which is taken orally. All the remedies mentioned above are for the treatment of PAH and all are considered to be growing at a very high rate for the next 5-6 years. What's even more exciting is what's coming down the pike in the pipeline.

United Therapeutics currently has an oral version of Remodulin that's being developed and is in two Phase III trials. Clinical data from both studies is expected to emerge in June and September of 2011. This could supercharge profitability past 2017, according to Credit Suisse. In addition, the company is branching out into other areas of medicine and has two Phase II trails under way. One is attempting to find a solution to idiopathic pulmonary fibrosis and the other trial is researching a drug for scleroderma. United Therapeutics has excellent future prospects, but as mentioned earlier, nothing is guaranteed in pharmaceutical studies. What they do have going for them is current earnings.

Based on the average estimate of the 19 analysts that cover the stock on Yahoo Finance, earnings are projected to come in at $2.82/share for 2011 and $3.47 for 2012. This gives it a 2011 P/E of 23 and going forward, a P/E ratio of 19. This is very reasonable for a stock with CAGR of 25% for the next 3-5 years. In fact, I low-balled the growth rate by using the ValueLine projections because they tend to extrapolate on the conservative side. If you would follow the mean analyst CAGR, you'd come up with 54%. It's a low PEG ratio (price/earnings/growth) no matter which metric you chose, and I would think this would be a nice equity to consider if you don't have a short attention span.

One caveat to United Therapeutics is that their earnings from quarter to quarter tend to be inconsistent, so the stock can be volatile. However, as Warren Buffett is famous for saying: "I have always preferred a lumpy 15% return to a smooth 12% return." I also noticed that during the sub-prime financial crisis, its price was cut in half, but it also had lousy earnings that year even though sales increased at a healthy clip. If we do get a pullback in the market, you may be able to buy it at a lower price. On a final note, the company has just been picked up for distribution in China even though Remodulin has not been approved there. If it does get the high sign from the Chinese government, and its Phase III trials are successful, watch out.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Am short the market with inverse ETFs.

Source: United Therapeutics for Profits and Pipeline