Hi all this is my first investment thesis.
LQDA fell around 60% after unfavorable ruling regarding its star product Yutrepia’s patent infringement of a competitor’s (UTHR) patent.
Yutrepia was marketed towards PAH & PH-ILD markets, however the patent infringement applies specifically to the PH-ILD segment. They have appealed the court’s ruling and UTHR wants FDA to revoke the approval for Yutrepia (extremely unlikely).
Even with the appeal the most likely scenario is that Yutrepia will have to drop the PH-ILD label and can market itself to PAH market and cannot market itself to PH-ILD (60% of its current revenue). The kick is that even if they drop the label, the drug is approved for PH-ILD markets and doctors can legally prescribe it to a patient for PH-ILD needs. They could still somewhat sell to the PH-ILD market if they price their products significantly marked down against the one only monopoly in the space (UTHR’s Tyvaso).
Hence I believe that the current price of $26.5 per share is overly harsh on a rapidly growing company with a solid product and may have priced around 30% lower than the most probable outcome.
I’m betting once everything is settled in the next few months the stock will be comfortably around $35-40 range.
This is the first in-depth dive I’ve done into any stock. Would love to know if I’m just full of shit or it’s an actual investment thesis? Any pointers from veterans are extremely appreciated.