Liquidia shares soar as settlement with United Therapeutics ends six lawsuits

what happened

Shares of Liquidia climbed close to 40% in pre-market dealings on Wednesday, after the company reached an agreement with United Therapeutics that closes a long-running legal fight. The accord, disclosed late Tuesday, brings an end to six cases covering patent, trade secret, contract and antitrust allegations tied to Yutrepia, an inhaled dry powder version of treprostinil. The medicine is cleared for pulmonary arterial hypertension and for PH-ILD, and it competes with United Therapeutics' Tyvaso.

Under the terms, Liquidia will stop promoting the drug for PH-ILD while continuing to sell it for PAH. The company will also make installment payments totaling about $380.7 million to United Therapeutics through 2027. Chief Financial Officer Michael Kaseta said, "We expect to fund the outlined payments from the ongoing sales of Yutrepia and cash on hand." Per Newsmetry API, the company will forgo an appeal of last month's adverse court decision and has petitioned the FDA to take the lung-disease indication off the label.

why it matters

Shares had lost more than half their value after last month's unfavorable court ruling, so the deal removes a major legal overhang. Jefferies analyst Manoj Eradath said Liquidia now looks mainly like a PAH growth story for Yutrepia, with L606, its experimental lung-disease candidate in late-stage development, adding further upside. J.P. Morgan's Jessica Fye called the payment "better than expected" for United Therapeutics, while Jefferies' Roger Song said the settlement could clarify the growth outlook for Tyvaso in PH-ILD.

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