LQDA: Another Bite at the Apple?
A few weeks ago we saw the bench trial for United Therapeutics’ patent infringement case against Liquidia in the District of Delaware in front of Judge Andrews—this time with United asserting the ’327 patent (which we’ve discussed before) pertaining to the use of treprostinil to treat ILD, rather than PAH. The reports out of the trial were conflicting, and I was not in attendance, so take that as you will when comparing the relative veracity of folks’ respective assessments.
That being said, I’ve been through the opening post-trial briefing, and I’ve got some thoughts. Additionally, it seems that folks are reading the tea leaves on earnings and pumping the stock into the print. We’ll take a look at those in reverse order to see if this is worth jumping in now
8/12 Earnings — Justified Excitement?
Some recent news from the BTIG Biotech Conference indicates that folks should be excited about Yutrepia adoption. Dr. Tim Lahm, a pulmonologist at study site University of Colorado, has indicated discontinuation rates are pretty darn high (~70%) for Tyvaso among inhaled-treprostinil naive ILD patients, with the leading cause of discontinuation being clinical worsening. Not great for United. Dr. Lahm has also indicated that he expects to switch one third to one half of his Tyvaso ILD patients to Yutrepia within the next year, and that he expects to start all new ILD patients on Yutrepia.
By most accounts, Liquidia is going to blow the expected script numbers out of the water on the 15th.
Litigation — General Thoughts
One of the things that is worth knowing at the outset is that, in the event Liquidia loses this litigation, the infringement relates only to treatment of ILD. That means that LQDA PAH revenues are not at risk. Given ILD is the larger market though, this could still be a big hit to LQDA’s top line, and it’s not impossible that United could obtain an injunction if successful in proving infringement, kneecapping Liquidia’s ability to get Yutrepia into the hands of those WHO Group 3 patients.
That is all pretty unlikely though. We’ve discussed the standard for issuing permanent injunctions previously—a standard that includes an equitable consideration of the public harm/benefit. There has been ample evidence that Liquidia is capturing treprostinil-naive patients in the Yutrepia-enrollees, demonstrating clear unmet need. The likelihood that Judge Andrews issues a permanent injunction in the event of a United win seems very low to me. That being said, a substantial royalty (likely on the order of 10-25%) would be a fairly sizable hit to Liquidia’s top line in the ILD market.