Not the best day for the sector as trading slows down closer to the holidays. I had been thinking we pullback further but even a 1% decline basically keeps us in this sideways range and then the afternoon happened. It was not clear why the market suddenly decided to correct through price, but I was not surprised. It looks to me know that $81 is clearly in the cards and that level should act as a decent level of support.
- LQDA won the ‘793 IPR patent appeal. This was expected but quite important. There was a dual track where LQDA was going through the PATB and there was also a court case. Given that LQDA won the appear with the IPR, the patent is invalid and so the court case likely loses standing. As such, LQDA is going to be asking for the injunction against them to be removed by the courts and they should win that as well. This sets up a launch in 2024.
- There are likely other aspects of the litigation that has to be resolved but it feels like the winning of the appeal all but settles the issue in favor of LQDA. Of course, the assumption of the bulls has been that LQDA is going to have the preferred DPI over UTHR but we are now set to see this in the commercial market place in 2024 (assuming there is no major surprise). The market at least sees risks to UTHR as it was down around 4%+ and LQDA was up around 40%. The relatively muted reaction in UTHR speaks to this being a real risk but not a threat to the core/base revenues (which makes sense given a broader pipeline of assets). In any case, this is a clear win for LQDA and sets up an interesting commercial competition for 2024.
- MGNX was up yesterday (over 10%) and there was no real news. There was an analysts upgrade in terms of price target but was that enough to spark of move? I actually think that was likely the reason for the move. The ADC space has been white hot and MGNX has probably been getting interest from investors as a potential additional domino to fall. As such, any additional attention onto it ADC approach, assets, and progress could actually move the stock. Obviously, this has limited efficacy in that each upgrade is going to have decreasing returns but if you were looking at the MGNX move and wonder, I think it was the price target upgrade.
- BLUE was down big as I think investors are starting to question it as a going concern. They did a big financing at a deeply discounted price. On the one hand it is good that they were able to raise but on the other hand, they are burning $70M+ a quarter with absolutely no clarity on when that will decline meaningfully and this raise only gave them two quarter of cash burn. So what happens in two quarters when they will be in this position again but now at a much lower valuation? That is the worry. What is going to get the stock back to a valuation that could support another $150M+ raise (its market cap is now around $150M) when they need that cash in two quarters? It is a difficult situation with no clear answer and so the stock will be pretty weak until there is more clarity.
I will end it here and hope that everyone has been having a good week.
Disclosure: Long UTHR and MGNX
