Why is Liquidia share price falling by nearly 50% today? US federal court ruling linked to lung drug Yutrepia explained

Liquidia stock plunged nearly 50% on Wednesday after a US federal court ruled against the company in a patent dispute with United Therapeutics. The court battle is linked to Liquidia's lung drug Yutrepia. Now, the court ruling can affect the company's plans to compete in the pulmonary hypertension treatment market.

Court rules Yutrepia infringes United Therapeutics patent

The US District Court for the District of Delaware found that Yutrepia infringed two foundational claims of United Therapeutics' '327 patent. The patent covers methods of treating pulmonary hypertension-associated interstitial lung disease, or PH-ILD, with inhaled treprostinil. It also covers certain dry-powder delivery features used in the treatment. Liquidia's request to exclude evidence linked to ownership of the patent of United Therapeutics was also rejected by the court.


Raymond James analyst Ryan Deschner said the decision is a key element of the case for Liquidia. He said the denial of the motion to strike has negative implications for the final decision. Leerink Partners analysts described the ruling as a win for United Therapeutics.

What does the ruling mean for Yutrepia?

The decision affects the commercial outlook for Yutrepia. It also strengthens the legal protection around United Therapeutics' Tyvaso, its inhaled treatment. United Therapeutics shares rose 12.3% to $540.54 following the ruling. Liquidia CEO Roger Jeffs said the company disagrees with the court's decision. Liquidia also plans to ask the US Food and Drug Administration to remove the PH-ILD indication from Yutrepia's label.

What happens next for Liquidia?

Liquidia shares reached their lowest level in nearly four months. If the losses remain, the company could lose about $3.18 billion in market value. Analysts expect a final judgment in about a week. The case could determine how Yutrepia is positioned in the market and how Liquidia competes with United Therapeutics in treatments involving pulmonary hypertension.