Updated: 3-United Therapeutics reached a settlement, eliminating key litigation risks, Liquidia stock surged

Added company comments in paragraph 8

Siddhi Mahatole

Reuters, Oct 14 - On Wednesday, shares of Liquidia (LQDA.O) soared 26% after the company resolved a years-long legal dispute with United Therapeutics (UTHR.O) over its lung disease drug, eliminating a major litigation risk for the pharmaceutical firm.

The settlement agreement, announced on Tuesday evening, brings an end to six lawsuits involving Liquidia’s drug “Yutrepia” (an inhaled dry powder form of treprostinil), covering allegations of patent infringement, trade secret violations, contract disputes, and antitrust claims.

“The agreement avoids further negative situations for Liquidia that had already been factored into its share price,” said Needham analyst Serge Belanger. The company's shares had tumbled by more than half last month after an unfavorable court ruling (link).

“Yutrepia” has been approved for treating pulmonary arterial hypertension (PAH) and pulmonary arterial hypertension associated with interstitial lung disease (PH-ILD), competing on the market with United Therapeutics' “Tyvaso.”

As part of the settlement, Liquidia will stop promoting its drug for PH-ILD but will continue to sell it for PAH treatment. In addition, the company will pay United Therapeutics approximately $380.7 million in installments through 2027.

“We expect to use ongoing sales of ‘Yutrepia’ and our cash on hand to make these payments,” said Chief Financial Officer Michael Kaseta.

Liquidia has also filed to remove PH-ILD from Yutrepia’s drug labeling with the U.S. Food and Drug Administration (FDA).

Meanwhile, United Therapeutics stated it has “established plans to facilitate a rapid and seamless transition for eligible patients to nebulized Tyvaso or Tyvaso DPI, ensuring no interruption in treatment.”

Analysts believe the settlement benefits both companies. Jefferies analyst Manoj Eradath commented: “With the legal uncertainties addressed, we now primarily see Liquidia as a ‘Yutrepia’ growth story in the PAH space, driven by label expansions and significant R&D pipeline opportunities from L606.”

L606 is Liquidia’s experimental lung disease drug currently in late-stage development.

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JPMorgan analyst Jessica Fye noted that while the settlement was in line with investor expectations, the approximately $380 million payment was “better than expected” for United Therapeutics.

Jefferies analyst Roger Song added that the development is also likely to improve prospects for Tyvaso’s future growth in PH-ILD.

Shares of United Therapeutics fell nearly 1% in early trading.

Meanwhile, according to regulatory filings submitted by United Therapeutics, as part of the settlement, Liquidia will dissolve its PH-ILD study group and cease publishing related data.

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