By Siddhi Mahatole
Oct 14 (Reuters) – Liquidia shares jumped 26% on Wednesday after it settled a years-long legal dispute with United Therapeutics over its lung disease drug, removing a major litigation risk for the drugmaker.
The settlement, announced late on Tuesday, ends six lawsuits over patents, trade secrets, contracts and antitrust claims related to Liquidia’s Yutrepia, an inhaled dry-powder form of the drug treprostinil.
“The agreement avoids more negative scenarios that had previously been priced in for Liquidia shares,” said Needham analyst Serge Belanger. The drugmaker’s shares had lost more than half their value after an adverse court ruling last month.
Yutrepia is approved to treat pulmonary arterial hypertension (PAH) and pulmonary hypertension linked to interstitial lung disease (PH-ILD), and competes in the market with United Therapeutics’ Tyvaso.
As part of the settlement, Liquidia will stop promoting its drug for PH-ILD, but will keep selling it for PAH. It will also pay United Therapeutics about $380.7 million in installments through 2027.
“We expect to fund the outlined payments from the ongoing sales of Yutrepia and cash on hand,” Chief Financial Officer Michael Kaseta said.
Liquidia has also asked the US Food and Drug Administration to remove PH-ILD from Yutrepia’s label.
Meanwhile, United Therapeutics said it has “established programs to help enable eligible patients to quickly and seamlessly transition to nebulized Tyvaso or Tyvaso DPI without interruption for their treatment.”
The settlement is largely favorable to both companies, according to analysts. “With the legal overhang removed, we now view Liquidia primarily as a Yutrepia growth story in PAH, with upside from label expansion plus significant pipeline opportunities from L606,” Jefferies analyst Manoj Eradath said.
L606 is Liquidia’s experimental lung disease drug, currently in late-stage development.
Although the outcome was on par with investor expectations, the roughly $380 million payment was “better than expected” for United Therapeutics, according to J.P. Morgan analyst Jessica Fye.
It would also likely improve visibility into future Tyvaso growth in PH-ILD, said Jefferies analyst Roger Song.
Shares of United Therapeutics were down nearly 1% in morning trading.
Meanwhile, Liquidia will terminate trial cohorts studying PH-ILD and cease publication of related data as part of the settlement, according to a regulatory filing by United Therapeutics.
(Reporting by Siddhi Mahatole in Bengaluru; Editing by Jonathan Ananda)
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