Pulmonary Arterial Hypertension Could Help Liquidia Technologies Stock Rise Over 300%
Liquidia Technologies Inc. (NASDAQ: LQDA) has seen its share of news after an acquisition and a recent stock sale. Now a new research report outlines favorable drug study data that will be presented in the coming weeks, which could add up to more than 300% potential upside.
The company is a late-stage clinical biopharmaceutical company and its proprietary PRINT technology targets an improved clinical profile of approved active pharmaceutical ingredients. Liquidia’s lead candidate is LIQ861, as a dry powder formulation of inhaled treprostinil (TYVASO) used to treat pulmonary arterial hypertension (PAH).
After a recent secondary offering of 9,375,000 shares priced at $8.00 apiece, the company raised some $75 million in gross proceeds, and all the shares in the offering were sold by Liquidia.
According to Wedbush Securities, the LIQ861 is “a potentially best-in-class” PAH target. The firm’s Liana Moussatos has a $38 price target, with an implied upside of more than 300%.
Remember that no single analyst report, no matter how high the upside projection is, should be the sole basis for making a decision to buy or sell a stock. Also, note that Wedbush participated in the recent underwriting syndicate, along with Jefferies (sole book-running manager) and Needham (co-manager).
Liquidia acquired RareGen in an all-stock deal to expand its PAH market opportunity, and the transaction is expected to close in the fourth quarter of 2020. The company will issue 6,166,666 shares for RareGen, and there is a potential upside for RareGen’s members of between 1,458,333 and 2,708,333 shares if certain sale thresholds are met in 2021. RareGen previously partnered with Sandoz and has successfully launched the first generic version of United Therapeutics’ Remodulin PAH drug.
Moussatos views the recent RareGen acquisition as a positive deal that offers Liquidia PAH expertise, a skilled sales force and rights to commercialize generic Remodulin, which would bring positive cash flow versus sales. The company’s combined liquidity using its first quarter’s ending cash of $40.1 million, and its $67.5 million raised would be more than $100 million. Moussatos now projects a cash runway that goes out into the first quarter of 2022.
There is a catalyst for the call outside of the recent stock sale. Wedbush Securities noted that the PDUFA date for LIQ861 in PAH is currently set for November 24, 2020. Moussatos anticipates approval at some point as highly likely after previous safety and efficacy data were favorable. The current launch date is expected to be around May of 2021 and the projected gross annual U.S. sales could reach over $660 million in 2027.
One issue worth noting is that Wedbush’s report also indicated that United Therapeutics has initiated a patent lawsuit over TYVASO, which could create delays on the approval and the launch.
Wedbush sees the next step, which could be positive, as patent trial and appeals board determination about the institution of the two patent petitions in the third quarter of 2020. While a $38 price target against less than a current $8.00 share price sounds excessive, Wedbush used to have a target price up at $50 in 2019.
Shares of Liquidia were trading at $7.90 on Tuesday, and it has a 52-week range of $2.65 to $12.10, as well as a $220 million market cap.