Liquidia options activity surges after patent ruling sinks LQDA 48%

A U.S. District Court in Delaware has ruled that Liquidia Corp (LQDA) has infringed two claims of United Therapeutics’ Patent No. 11,826,327, which covers inhaled treprostinil for pulmonary hypertension with interstitial lung disease (PH-ILD). Liquidia’s flagship product YUTREPIA, which holds the PH-ILD indication, constitutes roughly half of its addressable market.

Consequently, the stock of LQDA fell by approximately 48%, plunging to around $36.87, triggering multiple Nasdaq halts. This ruling has prompted Liquidia to announce its intention to submit an FDA supplement to remove the PH-ILD indication from YUTREPIA's label, marking a significant concession by the company. Moreover, United Therapeutics (UTHR) has requested injunctive relief that could go beyond a label change, potentially restricting the availability of YUTREPIA altogether.

The remedies window is one week. The call/put ratio of ~1.51 (20,231 calls vs. 13,377 puts) is an unusual figure, indicating a counterintuitive sentiment among traders. The deep-OTM calls ($75, $80, $90) with the stock priced at $36.87 are not bullish consensus but may represent a mix of closing out previously held long positions (delta hedges unwinding after the market gap-down) and speculative bets on the outcome.

A favorable appellate decision or injunction ruling could theoretically restore significant value to LQDA. UTHR has also risen on the same ruling, reflecting the zero-sum nature of patent litigation outcomes. The critical question now is whether Liquidia's YUTREPIA outside of the PH-ILD indication (pulmonary arterial hypertension) can sustain the business while the legal appeals play out – likely a multi-year legal timeline.