Valorem Research's Lionel Hutz talks LQDA v. UTHR hearing at the Federal Circuit + argument review

Episode Summary

Executive Summary: The hosts examine Liquidia’s Federal Circuit appeal of a PTAB decision concerning United Therapeutics’ ’793 patent, which covers dosing for inhaled treprostinil. The guest says affirmance would clear a path for Liquidia’s Tyvaso-alternative, Yutrepia, to launch in 2024; reversal could keep it blocked until the patent expires in 2027, while remand would prolong uncertainty. He estimates an 80–85% chance of affirmance, while emphasizing legal and investment risk.

Main Topics: The appeal and its commercial stakes: The Federal Circuit heard United Therapeutics’ appeal of the PTAB’s decision favoring Liquidia on the ’793 patent. Affirmance could enable Yutrepia commercialization; reversal would leave an injunction and regulatory stay in place. United Therapeutics’ principal arguments: United focused on whether conference abstracts were publicly disseminated as prior art and whether the prior-art references disclosed the claimed dosage or made it obvious. The dosage issue concerns the relationship between disclosed concentrations and the amount ultimately delivered to patients’ lungs. Evidence of public dissemination: The panel questioned the lack of a witness declaration from any of the approximately 20,000 conference attendees. The guest countered that circumstantial evidence can establish dissemination and cited a District of Delaware decision, while noting it does not bind the Federal Circuit. Judges’ questions and oral advocacy: The guest characterized Judge Reyna’s questions as more favorable to United, Judge Lori’s as more favorable to Liquidia, and Judge Prost’s position as harder to read. He thought Liquidia’s presentation was more coherent, while United’s counsel was notably loud. Possible rulings and remand risk: The court could affirm, reverse, or remand the case for further explanation. A remand could ask the PTAB to clarify whether the record contained conference abstract books or sufficiently established dissemination; the guest considered reversal most likely to hinge on the dosage-obviousness argument. Outcome estimates and investment caveats: The guest estimated an 80–85% chance of affirmance, roughly a 10% chance of remand, and no more than about a 10% chance of reversal. He compared affirmance odds with an approximately 85% historical rate, while stressing uncertainty and that the discussion is not investment advice.

Key Arguments: United needed to prevail on only one appellate argument to overturn the PTAB result, so it emphasized what it considered its strongest issues within the 15-minute argument limit. For the prior-art issue, United argued that the record lacked direct confirmation that conference materials reached attendees; Liquidia relied on circumstantial evidence, including library records and evidence about the conference materials. The guest argued that circumstantial evidence may be enough under the applicable standard and that a reasonable decision-maker could find dissemination, even without a witness declaration—particularly given the age of the 2004 conference. The guest identified a potential weakness in Liquidia’s presentation: its counsel described record materials as the conference abstract books, a characterization not expressly made in the PTAB’s final written decision. That gap could prompt a remand for clarification. On obviousness, United could argue that the prior art did not establish the claimed delivered dose and that expert testimony connecting concentrations to lung delivery was conclusory or came from witnesses who were not inhaler-design specialists. Because the appellate court reviews key findings for substantial evidence, it need not decide that it would reach the same result; the question is whether a reasonable factfinder could reach the PTAB’s conclusion.

Data Points: Oral argument time: 15 minutes per side - The Federal Circuit hearing was tightly limited, leading United Therapeutics to concentrate on selected arguments. Conference attendance: Approximately 20,000 people - The number of attendees was raised in questioning about whether the conference abstracts had been publicly disseminated. Conference year: 2004 - The conference at issue preceded the patent filing by more than a year; the age of the evidence complicates finding witnesses or retained materials. Potential Liquidia commercialization: 2024 - The guest said affirmance could allow Liquidia to commercialize Yutrepia in 2024. Patent duration: Until 2027 - If Liquidia loses, the patent and related restrictions could prevent commercialization until the patent expires. Guest’s estimated chance of affirmance: 80–85% - The guest’s approximate estimate for the court affirming the PTAB decision. Guest’s estimated chance of remand: About 10% - A remand could require the PTAB to clarify its reasoning and extend uncertainty. Historical PTAB affirmance rate: About 85% - The guest cited this as the approximate base rate for affirmance of PTAB invalidity rulings.

Pivotal Quotes: "If they win, if the decision from the PTAP is affirmed, they will be commercializing their pulmonary hypertension drug, Mutrepia, in 2024." — Lionel Hutz: Summarizes the commercial significance of the appeal; the transcript elsewhere spells the drug name Yutrepia. "There is a tension." — Judge Reyna, as recounted by Lionel Hutz: Refers to uncertainty in case law about how much circumstantial evidence is enough to prove public dissemination of prior art. "I think 80, 85% chance they're affirming." — Lionel Hutz: Gives the guest’s rough assessment of the likelihood that the Federal Circuit would affirm the PTAB.

Implications: Affirmance could remove a major legal barrier to Liquidia’s launch, while reversal or remand could delay it and preserve United Therapeutics’ protection. The outcome is uncertain; listeners should treat the probability estimates as the guest’s legal analysis, not investment advice.