Liquidia agreed on Tuesday to pay United Therapeutics to end every lawsuit between the two companies, and its shares jumped 42% after the bell because Yutrepia, its only approved drug, stays on the market. Here is what the 8-K filed Wednesday actually commits it to:
- A net $175.0 million to United Therapeutics within 30 business days, then $72.7 million by January 31 and another $72.7 million by April 30, 2027.
- $60.25 million this month to three other parties: $21.75 million to Sandoz, $19.05 million to Henderson SPV and $19.45 million to PBM RG Holdings.
- Removing pulmonary hypertension with interstitial lung disease, known as PH-ILD, from Yutrepia’s label, and stopping all promotion for it “immediately and permanently.”
- No appeal of the September 30 ruling that Yutrepia infringes two claims of a United Therapeutics patent.
- Releases that only take effect once the money is paid, the cases are dismissed and the FDA approves the narrower label.
The $380.7 million in every headline is a net figure. The netting is where the story is.
The 8-K says the $175.0 million is due “after taking into account payment by UTC to the Company” to settle a separate case. That case is an antitrust suit Liquidia’s subsidiary, formerly RareGen, has pressed against United Therapeutics and Smiths Medical since 2019 over generic treprostinil injection. It sits on appeal at the Third Circuit.
So United Therapeutics is also paying Liquidia to make an antitrust claim against it disappear. Neither company has said how much.
And the three other payees are not United Therapeutics at all. Henderson and PBM are litigation funders that bankrolled the RareGen case from 2020 in exchange for a cut of any recovery. Sandoz held a 50% share of the proceeds. Liquidia had to buy all three out before it could trade the case away.
The Man Writing the Check
The chief executive who agreed to this is Roger Jeffs, who was co-CEO of United Therapeutics before he took over Liquidia in 2022. Since then he has run the company trying to take Tyvaso patients away from his old employer.
He nearly did it. United Therapeutics’ nebulized Tyvaso sales fell 18% in the second quarter, and Yutrepia’s net sales reached $170.4 million in the same quarter, up from $6.5 million a year earlier.
Then a Delaware judge upheld two claims of the ‘327 patent. Liquidia fell 57% that day, to $30.26, and lost about $3.18 billion in market value.
Jeffs said then: “We respectfully disagree… fully prepared to pursue all available appellate options.” Two weeks later his company agreed not to appeal.
The mechanism is worth understanding, because it is why Yutrepia survives at all.
The ‘327 patent does not cover treprostinil. It covers a use: treating PH-ILD with the inhaled drug. So the remedy is surgery on the label, not removal of the product.
Generic drugmakers do this all the time. It is called a carve-out, and it lets a cheaper copy sell for every use except the patented one.
Liquidia is a branded company performing the same operation on itself. Yutrepia keeps pulmonary arterial hypertension, roughly 45,000 diagnosed and treated US patients by the company’s own count, and gives back PH-ILD, the use United Therapeutics sued over.
Nothing in the filing governs what a pulmonologist writes on a prescription pad. It governs what Liquidia’s sales force can say, which is now nothing about PH-ILD, forever.
Who Got Paid
Start with the cash.
Liquidia held $396.1 million in cash on September 30, according to its own settlement release. The settlement totals $380.7 million. That is 96% of the cash on hand.
About $235 million of it, the $60.25 million this month plus the $175.0 million within 30 business days, falls due in roughly six weeks. That is 59% of the September balance.
Cash rose by $111.9 million in the third quarter, from $284.2 million at the end of June. At that pace the settlement eats about three and a half quarters of what the business produces.
The company says it can cover all of it from Yutrepia sales and cash, with no new financing. Preliminary third-quarter net sales of $222.7 million, up 31% from the second quarter, make that plausible.
The stock tells you how relieved investors are, and how far that relief goes.
Liquidia closed at $26.81 on Tuesday and traded around $41.50 before the open Wednesday, up more than 50%. Before the ruling, by our arithmetic from the 57% drop, it was worth about $70.68 a share. Even after the rally it sits roughly 41% below that.
That gap is the price of PH-ILD plus the check.
United Therapeutics, meanwhile, collects about $320 million net, gets PH-ILD back for Tyvaso without a fight, and retires an antitrust case that had already reached an appeals court.
The litigation funders get $38.5 million to walk away. Sandoz gets $21.75 million, and the commercial rights to Treprostinil Injection move to it.
BTN’s view is straightforward. For Liquidia this is a survival deal, and a sensible one: an injunction request was pending, and a company with one approved drug cannot gamble it on an appeal. For United Therapeutics it is a much better deal, and the market is treating the whole thing as relief when it is a toll.
What bothers us is the netting. When money moves both ways in a patent settlement, the gross figures are the ones that tell you what each side gave up. Here, the amount United Therapeutics paid to end an antitrust claim over generic treprostinil injection is folded inside a single net number.
Payers and patients are entitled to see that number, because the case was about competition from a generic treprostinil injection.
Both companies should publish the gross terms. Liquidia’s third-quarter call in November is the obvious place to start.