Liquidia (LQDA) shares charged higher on Oct. 14 after a settlement with United Therapeutics (UTHR) removed a major threat to its commercial prospects. The agreement resolves six lawsuits and preserves access to Yutrepia for patients with pulmonary arterial hypertension. LQDA will make net settlement payments totaling $380.7 million through 2027.
Despite today’s massive rally, Liquidia stock remains down about 60% versus its year-to-date high.
Why the United Settlement Is Bullish for Liquidia Stock
LQDA shares soared today primarily because the settlement gives investors greater certainty about the company’s core business after September’s adverse patent ruling. Yutrepia can remain commercially available for pulmonary arterial hypertension, allowing the firm to keep competing for patients without disruption.
The concessions are substantial, though. Liquidia has agreed not to appeal the ruling and to stop promoting its flagship drug for pulmonary hypertension associated with interstitial lung disease; it has also submitted a request to remove that indication from its label.
Meanwhile, settlement payments also represent a significant financial burden.
That said, the investment thesis becomes easier to assess: investors can now focus on the earnings potential of the remaining PAH franchise.
LQDA Shares Are Attractive at Current Price
Liquidia’s commercial momentum gives the rally support beyond legal relief.
Preliminary, unaudited Q3 Yutrepia sales reached $222.7 million, which represents 31% sequential growth, while the company’s cash and equivalents stood at $396.1 million on Sept. 30.
In fiscal Q2, the firm’s net income came in at $74.7 million, demonstrating adoption had already started translating into profits. These numbers support an investment case built on an established revenue-producing product.
Investors should also note that LQDA stock has a history of closing each of the final three months of a calendar year in the green, a seasonal pattern that makes it even more attractive to own in the near term.
How Wall Street Recommends Playing Liquidia
Wall Street analysts haven’t thrown in the towel on Liquidia shares either.
According to Barchart, the consensus rating on the U.S. specialty biopharmaceutical company sits at “Moderate Buy,” with the mean price target of about $51 indicating potential for another 50% rally from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.