Liquidia stock crashed Monday after the Food and Drug Administration delayed the final approval for its drug, Yutrepia, for patients with a pair of lung diseases.
Though the FDA granted Yutrepia a tentative approval, the final approval isn't expected until May 23. Liquidia hoped to launch Yutrepia for patients with pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease in the fourth quarter, Needham analyst Serge Belanger said in a report.
The news sent shares of United Therapeutics flying. United makes Tyvaso, a treatment for both diseases. Liquidia and United have been engaged in a long-standing patent battle. The three-year exclusivity for Tyvaso DPI, or dry powder inhalation, will expire before the expected final approval for Yutrepia.
"This is a curveball scenario that we were not anticipating," Belanger said. "It's not the worse scenario where United Therapeutics was seeking the ability for a 30-month Hatch-Waxman approval stay (into 2026), or the best, immediate FDA approval," he said.
On today's stock market, Liquidia stock plummeted 30.6% to 9.79. United Therapeutics stock, on the other hand, jumped 8.6% to close at 348.58.
Liquidia Plans To Challenge FDA
Like Tyvaso DPI, Yutrepia uses an inhaled powder to treat PAH and PH-ILD. The latter is a significantly larger market.
The tentative approval means Yutrepia has met all the standards required for approval, "but must await the expiration of regulatory exclusivity of a competing product before final approval can be granted," according to Liquidia's news release.
Liquidia Chief Executive Roger Jeffs said the company disagrees with the FDA's decision to give Tyvaso DPI a three-year exclusivity period. Tyvaso DPI gained approval on May 23, 2022.
"We plan to take quick action to challenge the FDA's broad grant of regulatory exclusivity and defend the ability for patients to have access to Yutrepia with the least delay possible," he said in a written statement.
Liquidia Stock Reverses Run-Up
Belanger, the Needham analyst, kept his buy rating and 25 price target on Liquidia stock.
Liquidia stock has a strong IBD Digital Relative Strength Rating of 96, meaning shares rank in the top 4% of all stocks when it comes to 12-month performance.
Liquidia shares had risen for the past seven straight days, retaking both their 50-day and 200-day moving averages, MarketSurge shows. But the move on Monday wiped out all that work. Liquidia stock opened at its lowest point since December.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
