Updated Version 2 - Liquidia shares soar as settlement with United Therapeutics eliminates key litigation risks

Stock price updated, analyst comments and chart added in paragraph 3

Siddhi Mahatole

Reuters, October 14 - Liquidia (LQDA.O) shares soared 26% on Wednesday after the company reached a settlement with United Therapeutics (UTHR.O), ending a years-long legal dispute over its lung disease drug and eliminating a major litigation risk for the drugmaker.

The settlement, announced late Tuesday, ends six lawsuits around Liquidia's drug Yutrepia (an inhaled dry powder formulation of treprostinil), involving patents, trade secrets, contracts, and antitrust allegations.

“The agreement avoids further negative scenarios that had already been factored into Liquidia’s share price,” said Needham & Company analyst Serge Belanger. After a negative court ruling last month, the drugmaker’s share price had dropped by more than half (link).

Yutrepia is approved to treat pulmonary arterial hypertension (PAH) and pulmonary hypertension due to interstitial lung disease (PH-ILD), and competes on the market with United Therapeutics’ drug Tyvaso.

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

“We plan to fund these payments through ongoing Yutrepia sales and cash on hand,” said Chief Financial Officer Michael Kaseta.

Analysts said the settlement is broadly positive for both companies. Jefferies analyst Manoj Eradath commented: "With legal uncertainties removed, we now see Liquidia primarily as a growth name in PAH through Yutrepia, driven by label expansion and significant pipeline opportunities from L606."

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

https://www.reuters.com/graphics/LIQUIDIA-STOCKS/mopardwmzva/chart.png

Liquidia said it will not appeal the ruling and has asked the US Food and Drug Administration (FDA) to remove PH-ILD from Yutrepia's indications.

JPMorgan analyst Jessica Fye said that although the outcome met investor expectations, the roughly $380 million payment was "better than expected" for United Therapeutics.

Jefferies analyst Roger Song believes the agreement may also improve market expectations for Tyvaso’s future growth prospects in the PH-ILD space.

United Therapeutics’ shares fell nearly 1% in early trading.

Meanwhile, United Therapeutics said in regulatory filings that as part of the agreement, Liquidia will disband its PH-ILD study group and cease publishing related data.

(To assist non-native English speakers, Reuters provides automated translations of its reports into several other languages. Automated translation may be inaccurate or lack needed context. Reuters does not guarantee the accuracy of translated text, and provides translations solely for reader convenience. Reuters accepts no liability for any damage or loss as a result of using the translation function.)