Arquitos Capital Management on Liquidia Corporation
Thesis
Liquidia is extremely cheap under any outcome of its patent infringement case. A win implies a share price of $140, while a loss with a royalty implies $123. Even in the highly unlikely worst-case scenario of an injunction, the shares are still worth $70 based on PAH sales alone. The launch of Yutrepia has been outstanding, and the company can significantly grow revenue beyond 2027.
“But, if you follow the math I have laid out above, Liquidia is extremely cheap today under any outcome. Additionally, I believe the company can continue to significantly grow revenue with stable margins in 2028 and beyond. $1.2 billion in 2027 is just the beginning.”
Key risks
- A negative outcome in the patent infringement decision could cause the stock to decline sharply in the short term.
- In a worst-case scenario (<5% probability), a judge could issue a permanent injunction on the sale of Yutrepia to PH-ILD patients.