Liquidia Corporation

Good morning and welcome everyone to the liquidia corporation second quarter 2024 financial results and corporate update conference call. My name is Lisa and I will be your conference operator today currently all participants on a listen only mode. Following the presentation, we will conduct a question answer session instructions will be provided at that time for you to queue up for questions, I would now like to remind everyone this conference call is being recorded. I will now hand the call over to Jason Elliott, Chief Business Officer. Please go ahead.

Thank you, Lisa. It's my pleasure to welcome everyone to Liquidia Corporation's second quarter 2024 financial results and corporate update call. Joining the call today are Chief Executive Officer, Dr. Roger Jeff, Chief Operating Officer and CFO, Michael Cassetta, Chief Medical Officer, Dr. Rajiv Sagar, Chief Commercial Officer Scott Mumaw, and General Counsel Rusty Shundler. Before we begin, please note that today's conference call will contain forward-looking statements, including those statements regarding future results, unaudited and forward-looking financial information, as well as the company's future performance and or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied on this call. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on our website. I would now like to turn the call over to Roger for our prepared remarks, after which he will open the call for your questions.

Roger? Thank you, Jason. Good morning, everyone. Thank you for joining us today. While we, and patients, still anxiously await FDA action on the eutrapia NDA, seeking approval for both pulmonary PAH and pulmonary hypertension associated with interstitial lung disease, or PHILD. We remain hopeful that we are close to achieving this. As a reminder, the FDA has had no legal impediments since April 1st to take action on the amendment as submitted, seeking approval for both PH and PHILD. What I can say today is that we have been in active and constructive communication with the FDA over these past four months though we will not comment on the specifics of our conversations with the FDA. To be crystal clear, our medical and commercial teams remain on high alert, ready to launch Utrepia immediately upon approval. Our sales team continues to call on key pH accounts, strengthening relationships and educating them on liquidia. And importantly, we are staging commercial product for rapid distribution to specialty pharmacies upon approval. Moving to our clinical programs, The open-label assent study of eutrepia in PHILD patients continues to ramp up in the number of active clinical sites, with parallel increases in patient screening and patient enrollment. We are pleased with the preliminary feedback from physicians, suggesting that patients can readily titrate eutrepia to escalating therapeutic levels in these PHILD patients. While the assent data needs to mature more, our early patient experience today suggests that the benefits of print-formulated tryprosinol delivered via a low-effort inhaler parallels a very good experience observed in PAH patients. For example, the median dose of butyrepia for patients currently enrolled beyond eight weeks in the ASCENT trial is 185.5 micrograms per treatment session, or approximately 21 breath equivalents of Tybaso per session, with a top dose of 318 micrograms, or approximately 36 breath equivalents. These doses are several orders of magnitude beyond the recommended 9 to 12 breath dose targeted Tybaso, and exemplify the paradigm-shifting potential of Utrepia for pH and pH Ion B patients, especially as it relates to tolerability and potentially durability. We plan to submit additional clinical data from the ECCENT trial at future medical conferences. Some more to come on that. With respect to our sustained-release liposomal formulation of inhaled naproxenil, L606, the preliminary safety data and exploratory efficacy data from the first 28 patients switching from Tyveso or Tyveso DPI in our open-label clinical study has been highly encouraging. We continue to observe favorable tolerability and titratability profile of twice-daily dosing of L606, likely attributable to the seven-fold lower CMAX, but with a similar systemic exposure over a 24-hour period compared with a four-times-a-day dosing of inhaled tryprosinol, all while using a rapid, portable, handheld breath-actuated nebulizer. The long-term safety data generated from this study has helped solicit favorable scientific advice from the European Medicines Agency, or the EMA, last month on our pivotal trial design, which was very consistent with the FDA's feedback from our Type C meeting in December. While we continue to observe these patients in the open-lambda study, our focus will now shift to our efforts to initiate the registration registration on global trial in patients with the ILD later this year. At this time, I will turn the call over to Mike to summarize the second quarter financial results.

Thank you, Roger, and good morning, everyone. I will briefly address our second quarter financial results found in today's press release. As you will see, revenue was $3.7 million for the second quarter 2024, compared with $4.8 million in the same quarter 2023. Revenue is tied to our promotion agreement with Sandoz to commercialize to proxenol injection. The decrease is primarily due to lower sales quantities in the current year as compared to the same period in the prior year. Cost of revenue increased to $1.5 million for the second quarter of 2024 compared to $0.7 million in the same quarter for 2023, with the increase being primarily due to our Salesforce expansion during the fourth quarter of 2023. Research and development expenses were $9.4 million in the second quarter of 2024 compared with $17.7 million in 2Q2023, which included a $10 million upfront license fee to PhRMOSA for the exclusive license to L606 in North America. We saw a $1.4 million decrease in expenses related to our Utrepia program driven by expensing prelaunch inventory costs in the prior year. These decreases were offset by a $1.7 million increase in clinical expenses related to our L606 program and a $1.5 million increase in personnel expenses related to increased headcount. General and administrative expenses were $20 million in the second quarter of 2024 compared to $9.2 million in the same quarter for 2023. The increase of $10.8 million was primarily due to a $6.3 million increase in personnel expenses, which includes stock-based compensation, a $2.2 million increase in commercial and consulting expenses, and a $0.9 million increase in legal fees related to our ongoing EUTREPIA-related litigation. In summary, we incurred a net loss for the three months ended June 30, 2024 of $27.9 million, or $0.37 per basic and diluted chair, compared to a net loss of $23.5 million, or $0.36 per basic and diluted chair, for the three months ended March 31, 2023. We ended the second quarter of 2024 with $133 million cash on hand and remain well-positioned financially to achieve our corporate objectives this year. With that, I'd like to now turn the call back over to Roger.

Thank you, Mike. As you've just heard, it's been an active summer on several fronts since our last call. We were fully prepared for the potential launch of Utrepio with a team of dedicated professionals who are poised to reshape and grow the market for a new interpersonal on Utrepio's approval. The market opportunity for inhaled chrysanthemum is currently at a $1.5 billion run rate, with the potential to grow in excess of $3 billion in the coming years. This market remains keen for a competitive alternative, especially one with the dosing and tolerability advantages that eutrophia can potentially provide once approved. With that, I would now like to open the call to questions. Operator, first question, please.

Thank you. If you would like to ask a question, please press star 11 on your telephone. You'll then hear an automated message advise that your hand is raised. We also ask that you wait for your name and company to be acknowledged before proceeding with your question. One minute while we prepare for the questions. And our first question today comes from Julian Harrison of BTIG. Your line is open.

Hi, good morning. Thank you for taking my questions and congrats on the recent progress. I'm wondering if we could briefly review why higher inhaled trypospinal exposure should be beneficial both in PAH and PHILD.

Yeah, Julian. Thanks very much for the question. So I'll start, and then I'll ask Rajiv to add some additional color. So what we know historically from the use of prostacyclines that, and one of the beauties of prostacyclines in particular is the ability to continually titrate to affect over time. Because unfortunately, these patients have an advancing disease that continues without relent. So the only way, the only therapeutic class that can address this progressive disease and remain a sort of an ability to tweak our prostacyclin. So if you look at tryprosinil in its various forms, parenteral, oral, inhaled, Um, you can see that, um, the ability to titrate is, is a hallmark of the therapy. What, but what has been limiting prior to eutrophia in particular, as you see with Tyveso is the inability to titrate above a fairly low therapeutic ceiling. So what eutrophia has done, and this is why I say it's paradigm shifting is it's giving you all the benefits of the parenteral and oral products. but giving it directly to the site of action to limit the systemic side effects. So you now have a highly flexible therapeutic with high utility that can really be, goes to effect also while minimizing the side effects. So I think this is why we're so excited about Utrepia. We think it brings a different sort of utility to the marketplace in terms of the tropostinol use. And we think this therapeutic profile will lead it to become both best in class and first in choice when considering starting a prostacyclin, be it parenteral, oral, or inhaled. Rajiv, I don't know if you have any additional comments.

Yeah, Julian, yeah, I think Roger answered most of it correctly. I would just sort of add is that, you know, we learned a lot from the increased study in PHLD. I think in that study, the data highlighted that patients that achieve more than at least nine breaths And especially as you get to higher doses, those patients, the clinical observations was that they walked further and they had also improvements in many of the secondary outcomes. Also, I think, you know, this is a very heterogeneous group of patients, both in PAH and PHLD, with various degrees of severity. And in many of these patients, the disease, as Roger highlighted, is progressive. The opportunity to continue to titrate and match disease severity and temper that down, I think, is going to be a clear advantage and a great armamentarium for clinicians as well as for the outcomes for patients. Great. Thank you, Prasidh. Thank you for the question.

Okay. Great. And one more, if I may. I was just curious if you have a good sense for when we might expect a comprehensive data disclosure from the ASCENT trial and can we maybe review, you know, what the key unanswered questions are that you plan to address with that trial? Yeah, maybe Rajiv, if you could comment on that.

Yeah, Julian. So, you know, again, just to remind everyone, you know, ASCENT is a study studying the safety and tolerability and the secondary outcomes would be exploratory efficacy of eutropia in patients with PHLD who have not been treated, that patients have to enroll with the baseline right heart catheterization. The study is actually for 24 months, and then we follow the patient out to one year. So what is very important here in this study is that what we're looking for is to maintain the patients on the optimal dose of eutropia and also to show durability, because what we do know is that after 16 weeks of increased study, many of these patients start to have a significant amount of instability. So we wanted to show patients definitely have durability. Our focus really coming out, you know, the next set of congresses that are approaching here is really to highlight some of this exploratory clinical efficacy data. We are following clinical variables such as, you know, walk distance in terms of six-minute walk, We're also looking at various forms of questionnaires. And finally, we're also looking at effects on the lung parenchyma and the lung vasculature by using CT chest imaging really to highlight really where the effect is, particularly on the pulmonary vasculature with the use of eutropia. I just want to highlight, as Roger said, is that at least right now the median dose for those patients now past the eight-week mark, is now 185.5 micrograms of eutropia. This is just to highlight that if you compare this to our Sentinel-Inspire study in PAH, by two years, patients were on, about a third of the patients were on 159 micrograms. So what we're seeing here is that providers and patients in particular, are able to tolerate eutropia. And there's also, just to go back to our last question, a very clear understanding by providers that dose, the higher the dose, the potential, the benefit of the patient. And I think we look forward to highlighting some of these clinical parameters in the very near future.

Thanks, Rajiv. So, Julian, as you can hear, a very robust study. We're trying to complete it by year end to specifically answer your question, and then we'll look to publish that in 25.

Excellent. Thank you, Gath. Welcome.

Thank you. One moment for the next question. And our next question will be coming from Serge Belanger of Needham. Your line is open.

Hey, good morning. Thanks for taking my question. I have a couple legal ones. First one on the UT case against FDA. I believe in the motion for dismissal, both the agency and Liquidia completed their brief. So just curious if you have any visibility on timelines for the next steps here, whether we'll get a hearing or Judge Bates will rule on the brief. And related to this case, how closely is FDA following this missile motion and Could that be a gating factor for them rendering a decision on the utopia NDA? Thanks.

Great, Serge. Thanks for the question. Rusty?

Yes, Serge. Thanks for the question. So taking your first question first, on the motion to dismiss next steps, we don't know yet. The court could have an oral argument. Or it could rule on the briefs. You know, we don't have an indication either way yet from the court. So, you know, really can't provide any guidance there just because we're waiting for the court to decide on that. On the second point, you know, obviously it's tough for us to comment on what's in the FDA's head. And I think as Roger said in his opening remarks, I think we want to be careful, you know, not to comment on our communications with the FDA. So, you know, obviously, once the FDA has taken definitive action, obviously, we will announce that. But in the meantime, you know, we're not going to comment on our communications with the FDA.

Thank you. Thank you for the question, Serge.

Thank you. And one moment for the next question. Our next question will be coming from Khabiz Yazda of Jefferies. Your line is open.

Morning, team. For the registrational study for L606, can you remind us the key features for that study design, and when is that slated to start? And then maybe just a few finer points on the stent study. How many more sites have you onboarded since the last update, and how many patients so far have you treated in the stent study? Thank you. Questions. Rajiv, both of those are in your court.

Yeah, hi, Convice. So, you know, regarding the global single placebo-controlled efficacy study with L606, specifically in patients with pulmonary hypertension associated with interstitial lung disease, we plan to initiate that study by the end of the year. I think we're working feverishly to, you know, do all the necessary steps to make sure that our protocols are appropriately submitted and viewed by agencies, as Roger highlighted. You know, we've had favorable feedback from both the Type C meeting with FDA and also from the scientific advice from the European Medicines Agency. So I think we remain pretty confident in our plans. We've already highlighted the primary endpoint in this study is going to be six-minute walk distance with a whole host of secondary efficacy endpoints that I think would be important to support our target profile. I think we were extremely confident based on the safety data that's emerging from the open-label study in the United States. Again, just highlighting the liposomal technology on top of the treprosanil, I think really has shown to minimize cough and really support dosing and titratability of this drug, I think, which is going to be a game changer, along with a reduced frequency to twice a day So we remain very, very excited about the feedback that KOLs throughout the global market has been showing for support of this study. This extremely significant amount of unmet need, I think, definitely outside the U.S., in addition to the U.S. in that regard. In terms of assent, we're close to about tripling the number of sites by the end of this month. And we remain quite confident on completing the study by the end of the year. We anticipate to have close to about 15 patients by the end of this month. Just to highlight that the majority of the sites that have been just recently initiated have come on over the past 45 days. and we anticipate the remainder of sites to come on within the next 30 to 60 days as well, then by that time, I think we'll be on full ramp to support the rest of the study.

Great. Thank you, Rajiv. Thanks for the questions, Kambi. As you can see, really positive data flow from both the L606 open-label study and the ASCENT trial. You know, we're obviously very excited to get into the registrational study with L606 and PHILD patients, as Rajiv said. And I think the fact now that we're seeing the ability to titrate as easily as we are and as quickly as we are, as well as to see the durability of the two times a day format, you know, that's an exciting phase three program with a very positive predictive future. Same for the ASCENT trial. I think when you see this rapid ability to dose these patients,

uh quite differentiating and i think you know something that that the market will lean on once we get to market um so thanks for the question companies next question please thank you and one moment for the next question our next question will be coming from the line of matt kaplan of laytonberg bauman your line is open hi good morning guys thanks for taking the question um

I guess, you know, since we're past the kind of legal impediments for FDA approval, I guess with your interaction with the FDA, has the FDA identified any material differences which would prevent approval and would, I guess, necessitate a CRL?

Hey, Matt. It's Roger. Thanks for the question. So, you know, as I said in the intro, we're really not going to comment on specific discussions with the FDA. I think one way to look at this is, yes, we are past the time when there was no legal impediment for approval. That being April 1st, four months past that. And while that's frustrating, I think if you want to put a positive spin on that, it's four months is in the rear view mirror. So there's been four months to work to a solution. So we think we're that much closer to a decision and an action. And we won't comment on that. direct communications with that, but we remain optimistic that we've had constructive discussions with the agency. And we remain highly focused on approval for both indications. So as we submitted it, we feel it was appropriate as amended, and we are seeking approval for both PAH and PHILD. We haven't backed away from that position, and that remains our focus. Apologies that I can't get specifics, but hopefully we'll have an action soon and we can talk about that in great detail with you.

Operator, next question. Yeah, no.

Thank you. And one moment for the next question. Our next question will be coming from the line of Jason Gerberry of Bank of America. Your line is open.

Hey, guys. Good morning. Thanks for taking my questions. So two for me, just on the cash burn language in the 10Q, about roughly around a year of cash runway, I assume that that assumes an approval and launch cost. Can you talk about, in the alternative scenario, if there are delays, any flexibility to preserve the cash runway, any flexibility or levers that you could pull? And then my second question is just, on United's citizens petition, is there any plans to submit any correspondence clarifying LGM's role as an importer? I assume that most of this is going to handle behind the scenes, if at all, but just curious if there's any plans to submit any response. Thanks.

Yeah, great. Thanks, Jason. So, Mike, if you'll address the cash burn question and the rest of you could talk to the citizens.

Yeah, so Jason, thanks for the question. I mean, I think where we sit now, we are sitting at $133 million of cash. We're very confident in our cash position. You know, we talked about all of our objectives for the rest of this year and going forward with Ascent, with getting L606 initiated, and also supporting a launch of Utrapia. You know, we've always taken pride of having a strong balance sheet. We feel that we still have that. And, you know, we're very confident in our ability to deliver. Now, with that being said, you know, we'll always focus on what's at hand. And, you know, depending on where things stand, we can make decisions. We will be able to do that. But our focus right now really is to deliver on all three of those objectives of getting Atropia launched, getting L606 pivotal trial initiated, and continuing the Ascent trial. When you look at our cash balance, I think our burn from year end to Q1 to Q2, we've always been disciplined in how we invest. We will continue to do that and look forward to hopefully a Utopia launch here in the not too distant future.

Jason, thanks for the question on the citizens petition. You know, we do not currently anticipate filing a public response to the citizen's petition. Obviously, you know, any issues that, you know, there would be direct communications between us and the FDA, which, you know, as Roger said before, we won't comment on. The other thing I'd point out is, I mean, even United Therapeutics had to file an amended citizen's petition to cure some of the misstatements on the original citizen's petition. That is public, but again, we won't have a public response, or at least we're not anticipating one at this time. Thank you. Thank you, Jason.

Thank you. And this does conclude today's Q&A session. I would now like to turn the call back over to Roger for closing remarks. Please go ahead.

Great. Well, again, I want to thank everybody for joining us today. As you clearly heard, we remain confident in the approvability of eTREFI in the near term for both PAH and PHILD and the competitive profile once launched. We look forward to updating you in the near future. Thank you.

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