Why Did Liquidia's Stock Explode in Pre-Market Trading?
Liquidia Corporation (NASDAQ: LQDA) is a biopharmaceutical company founded in North Carolina in 2004. It produces YUTREPIA, an inhaled dry p
July 20, 2022

Liquidia Corporation (NASDAQ: LQDA) is a biopharmaceutical company founded in North Carolina in 2004. It produces YUTREPIA, an inhaled dry powder formulation of treprostinil delivered through a palm-sized device. The formula is to be used for the treatment of pulmonary arterial hypertension. The company's share price increased by 45% before the market opened today. This is a huge jump, but what caused it?

Why did Liquidia stock jump in pre-market trading?

Yesterday Liquidia Corporation announced that the U.S. Patent Trial and Appeal Board (PTAB) ruled in its favor in the Inter Partes Review proceeding against a patent ('793 patent) owned by United Therapeutics Corporation (NASDAQ: UTHR). The PTAB ruled that based on the evidence, all the claims of the patent in question have proven to be unpatentable.

Liquidia CEO Roger Jeffs said the "decision is another step down the path towards YUTREPIA's potential final regulatory approval. We will continue to vigorously defend our right to commercialize YUTREPIA as soon as possible." This advancement towards commercialization boosted investor confidence in the company and resulted in the stock price soaring by the end of the day.

However, the legal battle between the two companies continues to drag on. This was just one part of a three-pronged approach used by United Therapeutics, who, in June 2020, filed a lawsuit against Liquidia for infringement of the '901 patent and '066 patent. United Therapeutics included the '793 patent in July of that year. Liquidia defeated the infringement case against the '901 patent in December 2021. 

Should Liquidia lose these cases, it will have to wait until the patent's expiry dates before it can begin the commercialization process of YUTREPIA, which would be 2027 for the '793 patent and 2028 for the '066 patent. When the lawsuit started, the FDA issued a regulatory stay on the final approval of YUTREPIA until October 2022 or earlier resolution/ settlement of the case.

Are biopharmaceutical stocks good investments?

These stocks are highly volatile and unsuitable for investors who are wary of risk. New products take years and large amounts of cash to develop and get regulatory approval before being commercialized. This doesn't even guarantee the product will be a success. As seen with Liquidia, legal battles over patent infringements can take place, delaying a product launch and increasing costs.

However, a long-term buy-and-hold strategy can help reduce these risks. After regulatory approval, these stocks can generate lots of cash due to patents acting as a defense against competition. This cash is then used to pay dividends and reinvest in research and development over the long term.

Remember though, only invest in companies that you know well and fully understand. Seeing a huge spike in share price can tempt you to invest, but try to keep your circle of competence in mind before parting with your money.



The Home of Successful Investing.

© 2024 MyWallSt Ltd. All rights reserved.


Services

Content

Social

Company

Support

Resources


This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.