Liquidia shares surge after reaching a $381 million settlement agreement with United Therapeutics over pulmonary disease medication

Reuters, October 14 - In pre-market trading on Wednesday, Liquidia (LQDA.O) shares surged nearly 40% after the company reached a settlement with United Therapeutics (UTHR.O) to resolve years of legal disputes over its pulmonary disease drug.

The settlement agreement was announced on Tuesday evening, ending six lawsuits related to Liquidia's drug Yutrepia (a dry powder inhalation form of treprostinil), which involved allegations of patent infringement, trade secrets, contracts, and antitrust issues.

"Yutrepia" has been approved for the treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD), competing in the market with United Therapeutics' "Tyvaso".

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

"We expect to make these payments through continued sales of 'Yutrepia' and our cash on hand," said Chief Financial Officer Michael Kaseta.

The agreement eliminates a significant legal risk for Liquidia — after a court ruling against the company last month, its shares had plummeted over 50% (link), while also reducing the competitive pressure faced by United Therapeutics’ Tyvaso.

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Jefferies analyst Manoj Eradath said: "With the legal overhang resolved, we now primarily view Liquidia as a growth story for 'Yutrepia' in the PAH space, with value drivers from label expansion and significant pipeline opportunities arising from L606."

L606 is an experimental pulmonary disease drug from Liquidia currently in late-stage development.

Liquidia stated that the company will not appeal the ruling and has requested the US Food and Drug Administration (FDA) to remove PH-ILD from 'Yutrepia's labeled indications.

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

Jefferies analyst Roger Song stated that the settlement is expected to improve market visibility on the future growth prospects for "Tyvaso" in the PH-ILD space.

United Therapeutics said in a regulatory filing that, as part of the settlement, Liquidia will terminate research groups targeting PH-ILD and will stop releasing related data.

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