Liquidia Corporation (NASDAQ: LQDA) stock surged nearly 40% in Wednesday's premarket trading after the company announced a $380.7 million settlement with United Therapeutics Corporation (NASDAQ: UTHR), ending years of legal disputes over its pulmonary hypertension treatments.
The agreement, announced Tuesday, resolves all six pending lawsuits between the companies. It also allows Liquidia to continue selling YUTREPIA, its inhaled treatment for pulmonary arterial hypertension (PAH), without interruption.
The settlement removes a major legal uncertainty for Liquidia as it expands YUTREPIA sales and advances its drug development pipeline.
Settlement Ends Six Legal Battles
The agreement follows a Sept. 30 federal court ruling that found Liquidia infringed two valid United Therapeutics patent claims covering inhaled treprostinil treatments for pulmonary hypertension associated with interstitial lung disease (PH-ILD).
As part of the settlement, Liquidia agreed not to appeal the ruling. The company has also submitted a request to remove the PH-ILD indication from YUTREPIA's label and has stopped promoting the drug for that condition.
However, YUTREPIA will remain available for PAH patients.
The settlement covers patent infringement, trade secret, contract and antitrust disputes. Neither company admitted liability.
Liquidia CEO Roger Jeffs said the agreement allows the company to shift its focus from litigation to expanding YUTREPIA sales and developing new treatments.
Liquidia Faces $380.7 Million Settlement Cost
Under the agreement, Liquidia will make a net payment of $175 million to United Therapeutics within 30 business days.
The company will also pay $145.4 million in two installments of $72.7 million each, due by Jan. 31 and April 30, 2027.
Separately, Liquidia will pay $60.3 million in October to settle other parties' interests in related antitrust litigation.
The company also terminated its promotional agreement for Treprostinil Injection and will stop commercially supporting the product.
Despite the financial obligations, Liquidia expects to fund the settlement through existing cash and YUTREPIA sales without raising additional capital.
Strong YUTREPIA Sales Support Financial Outlook
Liquidia reported preliminary, unaudited third-quarter YUTREPIA net product sales of $222.7 million.
The company held $396.1 million in cash and cash equivalents as of Sept. 30.
Chief Financial Officer Michael Kaseta said Liquidia expects to rebuild its cash reserves while funding planned clinical studies without additional financing.
Meanwhile, the company plans to expand YUTREPIA's market presence and continue developing L606, an investigational inhaled treatment for pulmonary hypertension.
Liquidia will provide further details on its financial performance and clinical pipeline during its third-quarter earnings call in November.
Analysts Revise Liquidia Price Forecasts
Separately, two Wall Street analysts updated their outlooks Wednesday following the settlement announcement.
BTIG analyst Julian Harrison upgraded Liquidia from Neutral to Buy and issued a $70 price forecast.
Needham analyst Serge Belanger maintained a Buy rating but lowered his price forecast from $72 to $58.
Overall, Liquidia carries a Buy rating with an average analyst price forecast of $64.43.
Liquidia Price Action
LQDA Price Action: Liquidia shares jumped 39.76% to $37.47 in Wednesday's premarket trading, according to market data.
