Liquidia - Q2 2026 Update
Solid results as momentum continues
Q2 Numbers
Liquidia (disclosure: long, see full disclaimer at end) showed solid Q2 results continuing the pattern of linear growth adding 5 percentage points of market share to 30% and showing some continuing efficiencies in COGS and SG&A as sales ramp. This was somewhat predictable from United Therapeutics previously disclosed soft Q2 sales.
Though R&D spend did increase, and likely will increase further, with a number of clinical trials on deck and tax payments are of course increasing. It seems 50% share is perhaps now the floor for what LQDA can achieve given product efficacy, which broadly equates to $1.4B in sales and may be achieved in 12 months (Q2 2027) on current momentum. That should broadly translate to $776M of net income on my model. At that point the company may also have $862M of cash on the balance sheet, depending on the extent to which R&D spend ramps.
Valuation
In 12 months, if the trajectory continues then 20x run-rate net income and the cash balance translate to a $184 share price compared to $84 today. That said, the legal overhang remains as we await Judge Andrew’s decision. I expect LQDA to prevail there, but a 20% haircut for the risk is prudent for a valuation of $147. Of course, share could continue to ramp well beyond 50%, but the question then becomes how soon the market transitions to next generation products, which may not be as favorable to LQDA as the current environment in competitive terms, even if the overall TAM is larger.
Risks/Opportunities
The key risks and opportunities for Liquidia are:
The upcoming legal decision, which could result in market limitations or patent royalties paid by LQDA. Such an outcome is not my base case and a recent Supreme Court opinion helps Liquidia here, but bad news as with any legal outcome is nonetheless possible.
Innovation in next gen products from Insmed (see here for their latest readout) and to a lesser extent United Therapeutics. LQDA have their own twice-daily L606 too, which is progressing well so far, but the landscape could become more even if Insmed come to market early with a once-a-day product (compared to 4x for Yutrepia currently).
Then aside from continued growth in core markets of PH-ILD and PAH, LQDA could expand share more broadly given efficacy and tolerability. This may include substituting or complementing oral or IV therapies and moving to new areas such as pulmonary fibrosis. The recently announced range of potential trials by Liquidia suggests a focus here and this could unlock the next level of growth, if successful, though it’s currently highly uncertain and we’re very early in the clinical trials process.
Conclusion
Liquidia Q2 numbers were broadly more of the same. Good news on growth, with management making sensible calls on R&D to support medium-term growth. That said share growth appears linear rather than exponential on recent quarters. I would expect the shares to continue to perform well, but the risks to monitor are getting past the legal decision and Insmed’s progress on TPIP as a next generation product and its efficacy and speed to market as compared to LQDA’s next gen L606.
In valuation terms as above, $147 appears a reasonable price target for right now looking a year out and factoring in legal risk. We could see a reasonable pop on a favorable legal outcome which cleans up the story a little here. However, the bull case from here is starting to depend, in part, on market expansion and next generation product success.
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