Liquidia: Court victory the awakening of an industry giant?

Key Points

• Liquidia's stock has surged 70% in a month, driven largely by a recent court win against United Therapeutics.
• The stock has received several analyst upgrades and seen significant insider purchases.
• Liquidia's YUTREPIA aims to enter the market by March 2024.

Shares of Liquidia NASDAQ: LQDA have been one of the top-performing stocks over the final quarter, with shares up almost 90% over the previous three months. However, the vast majority of those gains occurred in the last week after the company received a court victory in its patent dispute with United Therapeutics NASDAQ: UTHR.

As a result of the recent victory, the stock is up over 70% monthly, with no signs of slowing down. And the good news doesn’t stop there for the company and its shareholders. Recently, industry analysts have upgraded the company’s stock significantly. Additionally, several insiders have recently purchased meaningful amounts of LQDA stock.

So, has the latest news and developments awoken a sleeping giant? Let’s look at the recent developments to gain a more thorough understanding. 

What is Liquidia?

Liquidia Corporation, a pioneering biopharmaceutical entity, specializes in developing, producing, and distributing diverse therapeutic solutions to address critical unmet medical requirements within the United States. 

Among its notable product portfolio is YUTREPIA, an innovative inhaled dry powder formulation of treprostinil explicitly designed for treating pulmonary arterial hypertension. Additionally, the company is engaged in the distribution of generic treprostinil injections across the United States.

The company, valued at over $750 million, reported earnings on November 7. They reported ($0.24) quarterly earnings per share, missing analysts' consensus estimates of ($0.20) by $0.04. The company earned $3.68 million during the quarter, compared to the consensus estimate of $4.55 million.

Shares jump on patent win

Liquidia saw its stock rocket higher by almost 40% after winning a court battle against United Therapeutics on Wednesday, December 20. On Wednesday, a U.S. appeals court upheld the U.S. Patent Board's decision, stating that certain sections of United Therapeutics' '793 patent related to treprostinil were not patentable. 

This victory for Liquidia is crucial as it plans to launch YUTREPIA, an inhaled dry powder form of treprostinil for pulmonary arterial hypertension. The decision also impacts Liquidia's effort to dismiss claims associated with the '793 patent in a lawsuit linked to its New Drug Application.

Liquidia's CEO, Roger Jeffs, expressed elation at the swift court decision, highlighting that the rulings from the Federal Circuit solidify that YUTREPIA does not infringe on any valid claims within the patents initially asserted by United Therapeutics. This legal development positions Liquidia to potentially enter the market with YUTREPIA for treating pulmonary hypertension associated with interstitial lung disease in March 2024, challenging United Therapeutics' Tyvaso.

Analysts forecast a major upside for LQDA

The company has a Moderate Buy rating based on five analyst ratings and a consensus price target of $16.67, forecasting a whopping 43% upside. That’s undoubtedly an impressive rating and price target, considering the consensus rating for S&P 500 companies is Hold with the consensus price target, forecasting about 7.5% upside.

Following the positive news, several significant price target increases arrived. On December 21, Bank of America boosted its target from $13 to $15, which forecasted almost 33% at the time of the increase. Ladenburg Thalm/SH SH increased its price target by 100%, from $15 to $30, forecasting a substantial 172% upside at the time of the report. 

Heavy insider buying

31.6% of Liquidia stock is owned by insiders, who have purchased 3,334,194 LQDA shares in the last 24 months for a total of $19,463,278. An even more significant figure when compared to the sales in the same period. Insiders have sold a total of 3,838 Liquidia shares in the last 24 months for a total of $28,803.

Almost half of the transactional purchasing value has occurred this month, with two insiders making substantial purchases, indicating immense confidence in the company’s prospects. Director Caligan Partners LP purchased 1,117,318 shares for a total of $7,999,996 on December 14. Company CEO Roger Jeffs also made an impressive purchase, buying 139,665 LQDA shares for a total value of $1,000,001 on December 14.