Liquidia Corporation LQDA suffered a major setback after the U.S. District Court for the District of Delaware ruled that two claims of United Therapeutics’ UTHR ‘327 patent are valid and infringed by Liquidia’s lead drug Yutrepia.
The ruling creates significant uncertainty around the commercial outlook for Yutrepia and triggered a sharp 57% decline in LQDA’s share price.
Year to date, LQDA stock has lost 12.2% against the industry’s growth of 7.7%.
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Yutrepia is an inhaled dry-powder formulation of treprostinil developed using Liquidia’s proprietary PRINT technology. The technology is designed to deliver the drug deep into the lungs through an easy-to-use inhaler while enabling higher doses than other inhaled treprostinil therapies.
The FDA approved Yutrepia in May 2025 for pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD), and the drug was launched in June 2025.
More on LQDA and UTHR’s Litigation Outcome
The patent dispute began in 2023, when Liquidia sought to add PH-ILD as an indication for Yutrepia. As part of the FDA process, Liquidia notified United Therapeutics that it was challenging certain patents covering inhaled treprostinil. United Therapeutics subsequently sued Liquidia for patent infringement in September 2023.
The dispute initially involved United Therapeutics’ ‘793 patent. However, after the USPTO issued a new ‘327 patent covering the treatment of interstitial lung disease, United Therapeutics amended its lawsuit in November 2023 to include the new patent.
The court has now ruled that claims 1 and 14 of the ‘327 patent, which generally cover the treatment of PH-ILD patients with inhaled treprostinil, including dry powder formulations of inhaled treprostinil, are valid and infringed by Liquidia.
Although the remaining asserted claims were found invalid, the ruling on these two claims presents a meaningful challenge for Liquidia.
LQDA’s Yutrepia Faces Greater Commercial Uncertainty
Yutrepia is Liquidia’s lead commercial product and an important part of the company’s growth strategy.
The latest ruling puts the PH-ILD indication at risk. Liquidia said it plans to submit a supplement to the FDA to remove PH-ILD from Yutrepia’s label. While this could potentially allow the company to preserve availability of Yutrepia for PAH, removing an approved indication would narrow the product’s addressable market and weigh on its commercial opportunity.
The ultimate impact remains unclear. LQDA and UTHR have been directed to submit a form of judgment to the Court within one week, specifying the parties’ proposed remedies for infringement of such claims.
Meanwhile, United Therapeutics has requested injunctive relief that could restrict Yutrepia’s availability in the market.
Liquidia acknowledged that it cannot currently estimate the financial exposure because of various possible outcomes, including appeals and further proceedings.
What Does This Mean for LQDA’s Investors?
The outcome is particularly concerning because of Liquidia’s reliance on Yutrepia as its primary growth driver. Although the company also markets generic treprostinil injection and is developing L606, these products do not currently provide the same commercial opportunity as Yutrepia .
L606, an investigational liposomal formulation of treprostinil licensed from Pharmosa Biopharm, is designed for twice-daily administration using a short-duration, next-generation nebulizer. It is being evaluated in PAH and PH-ILD.
A broader restriction on product availability would represent a more serious risk to the company’s revenue prospects.
Liquidia plans to pursue available appellate options, which could eventually alter the current outcome. It also faces a competitive environment in pulmonary hypertension. United Therapeutics has an established presence in the treprostinil market, while other companies are developing or commercializing therapies targeting PAH and related pulmonary vascular diseases.
United Therapeutics markets and sells Tyvaso DPI (a dry-powder formulation of treprostinil) and nebulized Tyvaso (treprostinil) Inhalation Solution, both of which are approved for PH-ILD.
Investors may want to remain cautious until greater clarity emerges on the final remedy and Liquidia’s appeal.
Insmed INSM represents another potential competitive threat through its investigational therapies, particularly TPIP.
TPIP is an inhaled dry powder formulation of the treprostinil prodrug treprostinil palmitil, which may offer a differentiated product profile for PH-ILD, PAH, progressive pulmonary fibrosis (PPF) and IPF.
Insmed is currently enrolling patients in the PALM-ILD and PALM-PAH phase III trials evaluating TPIP in PH-ILD and PAH, respectively. INSM recently reported positive 12-month data from an ongoing open-label extension study in PAH.
LQDA’s Zacks Rank
LQDA currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).