LifeSci Capital said the agreement removes a major obstacle that could have discouraged potential buyers from pursuing an acquisition of Liquidia.
- BTIG upgraded Liquidia to ‘Buy’ from ‘Neutral’ with a $70 price target, implying about 93% upside from current levels.
- Wells Fargo raised its target to $33 from $30 while keeping an ‘Equal Weight’ rating.
- Liquidia will make payments of about $380.7 million to United Therapeutics through April 2027.
Shares of Liquidia (LQDA) surged 40% on Wednesday after Wall Street welcomed the biotech company’s settlement with United Therapeutics (UTHR), which ends years of legal battles and allows Liquidia to continue selling its key lung disease drug, Yutrepia.
The agreement removes a major legal uncertainty that had weighed on Liquidia’s stock, prompting several brokerages to upgrade their ratings or revise their price targets.
If the current levels hold at close, LQDA would clock its best day since December 2023.
Analysts Say Settlement Removes Major Overhang
According to The Fly, BTIG upgraded Liquidia to ‘Buy’ from ‘Neutral’ with a $70 price target, describing the settlement as “better than the best-case scenario we envisioned.” The target represents roughly 93% upside from current levels.
LifeSci Capital also upgraded the stock to ‘Outperform’ from ‘Market Perform,’ with a $59 price target. The firm said the agreement removes a major obstacle that could have discouraged potential buyers from pursuing an acquisition of Liquidia.
Needham maintained its ‘Buy’ rating but lowered its price target to $58 from $72, reflecting changes to its financial forecasts following the settlement.
Meanwhile, Wells Fargo raised its target to $33 from $30 while keeping an ‘Equal Weight’ rating. The brokerage sought more clarity on potential legal risks surrounding L606, Liquidia’s experimental inhaled treatment being developed with Pharmosa Biopharm for two lung conditions: pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD).
LQDA, UTHR Settle Six Lawsuits
Liquidia and United Therapeutics agreed to settle all six pending lawsuits involving patent infringement, trade secrets, contractual disputes, and antitrust claims.
The agreement follows a September 30 federal court ruling finding that Liquidia infringed two United Therapeutics patent claims covering the use of inhaled treprostinil to treat PH-ILD. LQDA stock crashed 57% after the verdict.
Under the settlement, Liquidia can continue selling Yutrepia for PAH without interruption. However, the company has agreed to remove the PH-ILD indication from the drug’s FDA-approved label and has stopped promoting it for that condition.
Liquidia To Pay $380.7M
As part of the agreement, Liquidia will make net payments of about $380.7 million through April 2027. This includes an initial $175 million payment to United Therapeutics within 30 business days.
Liquidia reported preliminary third-quarter (Q3) Yutrepia sales of $222.7 million and cash and cash equivalents of $396.1 million as of September 30.
Despite the substantial settlement costs, management expects to cover the payments using existing cash and revenue from Yutrepia sales.
Retail’s Take On LQDA
Retail sentiment surrounding LQDA on Stocktwits turned ‘bullish’ from ‘neutral’ over the past 24 hours, amid ‘extremely high’ message volumes. LQDA was also among the top trending tickers on the platform.
One user urged buying LQDA only when the stock drops to $30 to $32. It is currently trading at around $37.
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LQDA shares are up about 18% so far this year, while UTHR shares have risen around 7%.
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