Liquidia shares surged after a settlement announced late on Tuesday ended six lawsuits with United Therapeutics. Liquidia will pay $380.7 million by 2027 and stop promoting its drug Yutrepia for PH-ILD. CFO Michael Kaseta said, "We expect to fund the outlined payments from the ongoing sales of Yutrepia and cash."
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.
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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.
The deal removes a major legal risk for Liquidia, whose shares had lost more than half their value after an adverse court ruling last month, while narrowing the competition for United Therapeutics' Tyvaso.
"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.
Liquidia will not appeal the ruling and has asked the US Food and Drug Administration to remove PH-ILD from Yutrepia's label, the drugmaker said.
J.P. Morgan analyst Jessica Fye said while the outcome was on par with investor expectations, the roughly $380 million payment was "better than expected" for United Therapeutics.
The settlement would likely improve visibility into future Tyvaso growth in PH-ILD, Jefferies analyst Roger Song said.
United Therapeutics said in a regulatory filing that Liquidia would terminate trial cohorts studying PH-ILD and cease publication of related data as part of the settlement.