Liquidia Corporation

Good morning and welcome everyone to the Liquidia Corporation second quarter 2025 financial results and corporate update conference call. My name is Nadia and I will be your conference operator today. Currently all participants are in listen only mode. Following the presentation we will conduct a question and answer session. Instructions will be provided at that time for you to queue for up for questions. I would like to remind everyone that this conference call is being recorded. I will now hand the conference call over to Jason Adair, Chief Business Officer. Please go ahead, sir.

Thank you, operator, and good morning, everyone. It's my pleasure to welcome you to the Liquidia Corporation second quarter 2025 financial results and corporate update call. Joining the call today are Chief Executive Officer, Dr. Roger Jeffs, Chief Operating Officer and CFO, Michael Cassetta, Chief Medical Officer, Dr. Rajiv Sagar, Chief Commercial Officer, Scott Mumaw, and General Counsel Rusty Schoenler. Before we begin, please note that today's conference call will contain forward-looking statements, including those regarding future results, unaudited and forward-looking financial information, and the company's future performance and or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause actual results or performance to differ materially. For more information, please refer to the documents filed with the SEC available on our website. With that, I'd like to turn the call over to Roger for our prepared remarks. Roger?

Thanks, Jason, and good morning, everyone. We are very pleased and excited to share our first commercial data for eutropia with everyone this morning. It's been a spectacular beginning. Just over 11 weeks ago, we were proud to introduce eutropia for the treatment of patients with pulmonary arterial hypertension, PAH, and pulmonary hypertension associated with interstitial lung disease, PHILD. Within one week of approval, we were live and in the market, shipping product, supporting physicians, and most importantly, delivering therapy to patients. This wasn't simply a product introduction. It was a launch executed with purpose and precision, and one that has been extremely well received by the physician and patient communities that we now serve. Today, we will share data and, as promised, provide additional granularity around key metrics to improve transparency regarding this early launch period. Since May, specialty pharmacies have reported over 900 unique patient prescriptions, leading to more than 550 patient starts on Eutrepia. That pace of adoption is unprecedented in the tryprostenol space and underscores the power of our print-enabled prostacyclin product. We had no doubt about the key attributes of Eutrepia's profile to enhance deep lung delivery with an easy-to-use, low-effort device, enabling a wide range of doses. I can honestly say in all my years of launching drugs in this space, this has truly outpaced all expectations, even mine, which were very, very high. Not only does this signal the value of what we have developed, but also that existing products fall short in addressing the needs of many patients. In conversations with prescribers and in communications from patients, the ease of use, tolerability, especially with regard to cough, and ability to escalate dose to clinical effect represents a market and meaningful improvement in the quality of care. Utopia's differentiated product profile, paired with the commercial success in driving brand awareness, has led to an early and enthusiastic uptake, as you have seen in the prescription and start numbers. In fact, it's been an unabated sprint since day one of launch. We've seen broad demand from cardiologists and pulmonologists with prescriptions occurring at both specialty centers and community practices. and they are treating a broad group of patients across both diseases who are prostacyclin-naive, transitioning from Tyveso and Tyveso-DPI, and even moving from oral prostacyclins. Eutrapia is truly off to a strong start and quickly positioning itself as potentially the best-in-class and first-in-choice option for patients in need of a prostacyclin therapy. Anticipating the strong interest. Our market access team prepared premium white glove services and reimbursement support to allow patients to gain early access to Eutropia. Healthcare providers have responded positively to the program's copay assistance and 28-day free vouchers, a first for an inhaled prostacyclin therapy. As a way of providing some insight, prescriptions received during the first six weeks of launch had a 75% script-to-start conversion rate. It's especially noteworthy that this early momentum has been achieved in spite of the customary period of new-to-market blocks and non-formulary positioning. We see the potential for accelerating growth and possibly higher conversion rates as we continue to expand market access during the third and fourth quarters. While the commercial team has been driving EUTREPIA's robust update, our clinical team has been analyzing maturing data from the ongoing open-label assent study, which was fully enrolled with 54 PHILD patients in March. This analysis includes the safety and observational exploratory efficacy data up to week 16. The ASCENT study was intentionally designed to include a real-world PHILD population treated with eutrapia. In particular, we treated patients ranging from mild pulmonary hypertension to those with more advanced hemodynamic and forced vital capacity impairments, and even patients listed for lung transplantation. The observations at week eight and week 16 are indeed impressive. The tolerability remains very favorable, as evidenced by the fact that only 18.5% of patients discontinued the study at week 16, with no discontinuations for serious or drug-related adverse events, including cough. For context, this favorable tolerability is juxtaposed by prospective data of Tyveso DPI from the National Jewish Health Center, a preeminent pulmonary care center where 69% of treatment-naive patients discontinued Tyveso DPI in a median time of only 40 days, with the primary reasons for discontinuation being cough and clinical worsening. Taking a slightly deeper look at the favorable tolerability that we are observing in the ASCENT study of those patients that reported a treatment-related cough, the vast majority, or 24 of 26 patients, reported mild cough, and only two patients reported a moderate cough. It should also be noted that in the longitudinal analysis, the mean daytime simplified cough scores remained essentially unchanged from baseline through week 16, suggesting the cough overall tended to be transient in nature and not worsened with the addition of eutrefia, even with escalating doses, and therefore likely similar to these patients' historical cough that is associated with their underlying interstitial lung disease. This tolerability is helping patients escalate to higher doses. The median dose at week 8 was 132.5 micrograms, or approximately 15 breath equivalents to Tyveso, and 159 micrograms at week 16, approximately 18 breath equivalents to Tyveso, with the highest exposure of 318 micrograms, comparable to approximately 36 breaths, four times per day at Tyveso nebulizers. The net result of greater tolerability and higher achieved doses also correlates with a robust efficacy result, with the observed median improvements in six-minute walk distance of 21.5 meters at week 8 that increased further to 31.5 meters at week 16. Overall, this data set continues to highlight the robust tolerability, titratability, efficacy, and durability of eutrapia in a real-world population of PHLD patients. We look forward to sharing the detailed data with the medical community, targeting the PH Professional Network Symposium Conference in mid-September and a major respiratory conference in October. Now, I will pass the call to Mike, who continues to guide the company with a firm hand on the financials and with an eye towards supporting continued growth.

Thank you, Roger, and good morning, everyone. In order to save time for more of your questions, I'd just like to hit the headlines on the financial statements filed this morning with the SEC NNR press release. We closed the quarter with over $173 million in cash and cash equivalents on the balance sheet, a solid position that will help us bridge to profitability over the coming quarters as we continue the commercial rollout of Eutrepia, invest in our pipeline, and expand operational capabilities. On the revenue side, we generated $8.8 million in the second quarter, of which $6.5 million came from Eutrepia product sales, which began shipping in June. The additional 2.3M dollars in service revenue related to our ongoing promotion agreement of interpersonal injection with Santos. Expenses for the quarter were in line with our expectations as we fully transitioned into commercialization mode. Looking forward to the end of the year, we anticipate increases in quarterly R&D expenses as we continue ongoing label studies and prepare to initiate the pivotal study of L606. SG&A expenses, after excluding non-cash and variable costs associated with Utrepia sales, should remain flat over the next few quarters. Our planned commercial spending supports the launch, but that said, any increase would be targeted to further acceleration in Utrepia adoption. Lastly, with Utrepia approved, we are expanding our footprint in North Carolina and have signed a lease for additional manufacturing space to support continuing growth, potentially tripling our production capacity. Targeted for occupancy in 2026, this state-of-the-art facility will include production space to house additional print manufacturing lines and analytical labs to support additional Eutropia manufacturing. We are continuing to execute on our plan, and our cast position gives us the flexibility to keep moving forward with confidence. With that, I'll hand it back to Roger.

Thanks, Mike. In just over two months, Eutropia has delivered on every front, with brand awareness growing, prescriptions rapidly escalating, pair access expanding, and clinical data maturing. With a clear and differentiated product profile, we are building a foundation, not just for a successful launch, but for long-term leadership in the prostacyclin market. I would like to thank our entire team who, like our product, are best in class. One final note before we begin the Q&A session. We plan to host an R&D day in the fall where we will provide an update on our open-label L606 study which will include data for patients who have been on L606 for up to a year. We are as excited about L606 as we are Eutrepia, but today is Eutrepia's day in the spotlight. Plus, L606 deserves its own stage to properly highlight its own unique product profile. With that, operator, first question, please.

Thank you, dear participants. As a reminder, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1-1 again. Please stand by. We'll compile the Q&A queue. This will take a few moments. And now we're going to take our first question. And it comes from Julian Harrison from BTIG. Your line is open. Please ask your question.

Hi, good morning. Congrats on the strong launch, and thank you for taking my questions. These are very impressive numbers. Three questions from us. First, on a weekly basis, has the eutrophia growth generally looked sequential, or was there some bolus effect early on? Second, PAH versus PHLD mix, along with percentage of patients diagnosed with underlying IPF, are you able to disclose those numbers now? And finally, on Ascend, it was great to see the very strong six-minute walk data out to or through 16 weeks. I'm curious if you could talk more about your decisional lead with the median six-minute walk changes instead of the average. Why are median changes maybe more appropriate here, and how does that compare to the competitive landscape?

Great, Julian. Thanks for the questions.

So in terms of uptake, I what we said in the script is that we've had accelerating uptake over time. So as we've been in the market, you know, again, still just for 11 weeks, each week seems to be a little bit better than the one before. And we think that trend hopefully will continue, particularly as we continue to evolve the payer landscape, uh, and remove some of the things like new to market blocks that existed when you first launched drugs. So, um, Awareness is driving a lot of that. I think we had a focus on the centers of excellence, the key centers, and certainly the adoption there has been rapid. I think the messages have been resonating very quickly, and that's the result of that, as you see that in the referrals and the script rate. We're not going to give the PAH versus PHILD split today. We want to make sure if we were to do that, that we had absolute clarity on what that is. And just because of the way some of that data has been collected, we can't really confirm exactly and precisely what the therapeutic split would be. And then for the ASCENT trial, maybe I'll hand that over to Rajiv to talk about why we think median data is most appropriate and more reflective. But the simple answer is, and I'll give it to Rajiv, is that it minimizes the impact of outliers. So particularly in an open-label study, you really want to look at medians to give a more, I think, accurate and reflective result from a population that we've studied. So, Rajiv, any other comment on that?

Yeah, Roger. Julie, nice to hear from you. No, I completely agree. I think it's less susceptible to being skewed to outliers or extreme values. You know, it's important to provide the central tendency in these situations, especially with small samples. And, you know, I think it also is more akin to how larger data sets are usually conveyed. I will state that we will be showing more granular detail at the upcoming conference at PHPN and in the upcoming conference in October. But I think we can say with a high degree of certainty that the mean and median values are fairly near each other. So I think that's really important to note as well.

Very helpful all around. Congrats again. Thank you, Julian.

Always good to hear from you. Operator, next question, please.

Yes, of course. Now we're going to take our next question. And the question comes live from Raymond James. Your line is open. Please ask a question.

Good morning. Congratulations on the strong start to your Utrepia launch and the ascent results. what proportion of paid drug is associated with the reported patient starts? And is this in line with your expectations? And what proportion of patient starts are switches from Tyvesa, DPI, or other inhaled or oral tryprosin products? Thanks.

Yeah, so let me, Mike, if you wouldn't mind answering the paid drugs question, and Scott, our chief commercial officer, you can talk about proportions as you can.

Yeah, thanks, Roger and Ryan. Great to talk to you. In terms of proportion of paid versus Newstart, I'm sorry, as a free drug, as we, as everyone knows, we have a couple of programs. We have a voucher program that provides the first 28 days free drug. For new patients, then we also have a bridge program that provides an additional 28 day supply at any time during 1 time during a patient's journey. So what I would say is specifically the amount of paid versus free drug, especially through the usage of the voucher program. It's in line with our expectations of what we've seen in other launches. Less than 50% have been on free voucher drugs, but again, we wanted to make sure we gave patients an opportunity to try our drug immediately to see if it's something that works for them and allows us to start that insurance adjudication process as we go. But we're very happy with the services that we provide, the market access services specifically that Scott and his team have provided, and I think have been very helpful for us as we've gotten eutrophia off the ground.

Great. And Scott, if you'll handle the second question. Sure.

Good morning. So in terms of switches versus new to prostacyclin patients, I think we've said in the past that our primary focus is the new to prostacyclin patients. And so commensurate with that, we've certainly seen the preponderance of the patients that are coming in. We have seen switches. I think it's no secret that, you know, there are many patients out there who've been on a DPI or nebulized inhaled and are either on that or are dissatisfied or came off of it. And so I think as Roger said in the prepared remarks, we have been surprised, let's say, with the volume of those. We're not going to get into the exact numbers. And we are also seeing, as I think Roger mentioned, some oral prostacyclin switches as well. So we'll keep an eye on that, you know, as time goes along and get a feel for what the run rate is for that. But that's kind of how it's playing out currently.

Thanks, Scott. I think the other thing I would add to that is, you know, where we said we, even I was surprised by the upside here. I think it was because of these switches. You know, what we found is that there is, a large number of patients with intolerant cough who remain on Tyveso DPI but are parked at low dose, so aren't really getting the benefit of the prostacyclin that they deserve, and those patients have readily looked forward to receiving eutropia. So that's been where the incremental upside has been in this near term, and I think that will continue to grow, particularly as the experience in the new patient arena sort of shows prescribers and patients that this drug is very, very effective and is the therapeutic prodigy that we hoped it would be. Next question, please.

Yes, of course. Just give us a moment. And the question comes from Jason Gerbery from Bank of America. Your line is open. Please ask your question.

Hey, good morning, guys, and congrats on the launch as well. My question, just thinking about second half and these patients that have started on eTrepia, how should we think about sort of the gross to net? Presumably, they've already kind of gone through their 28-day voucher. And so I'm just kind of curious, like if those patients are going to flow through it full whack or if there's a gross to net assumption that we should assume for those patients plus those that maybe convert from the prescription referral to a start. And that 75% conversion rate, the other 25% that haven't converted, is that just a function of time or is there anything structural or gating for those patients just trying to get a sense of what that process is like and the typical time from starting the prior authorization process to ensuring coverage. Thanks.

Great. Thank you, Jason. Great questions.

Mike, if you wouldn't mind answering those questions.

Mike, you might be on mute. Oh, sorry.

Relates to As it relates to gross net, it's not something that we've talked about in terms of projecting what our gross nets to be. I mean, I think what we've said all along is from a payer point of view, we want to make sure patients have an opportunity to choose Utrepia. As Roger had said earlier, they've been new to market blocks, especially in areas where our competitor is contracted specifically in the commercial space. We now have signed contracts with all of the major commercial payers. We expect those new to market blocks to be removed shortly. So we would expect, like I said, more prescriptions as we move through the year to be subject to rebates. But again, we're very confident in our ability for Utopia to win in this space. I'm very confident for us to be at parity access. And our stated goal from the very beginning was that we would You know, we want to make sure patients have a choice, and I think Scott and his team have done a great job of working towards that, and we look forward to, you know, to further development there here in the second half of the year. The second question around the convert rate, what I would say is, again, the patient support services that we put in place, which includes reimbursement specialists to navigate this landscape, we expect, you know, when you look at industry standards, I think that's a very, very good percentage Again, as Roger said, there were some headwinds early on as it relates to these new-to-market blocks. As those release, we think that that could be an accelerant as we get through the back end of the year here and as we move forward to, again, to make sure patients have the ability to choose, and we feel very confident in our ability to deliver on that.

And Mike, if I could just squeeze a follow-up in, just any commentary regarding symphony data on a go-forward basis? Should we look at it? Have you guys interrogated that and how we should interpret that on a go-forward basis?

Yeah, so what I would say is, as is pretty standard in the industry, this information is usually not available. We obviously have seen the data like you have. I would not expect to see future data to come out, and we look forward to sharing our results as we, you know, as we go through each quarterly earnings call.

Thanks.

Now we're going to take our next question. And the question comes line of Corey Jubinville from LifeSide Capital. Your line is open. Please ask your question.

Good morning. Congrats on all the progress. It seems like traction has been really great so far. As we think about launch plans throughout the rest of the year, what kind of near-term levers are there to pull to accelerate growth? And again, given the traction you've seen so far, is the plan to kind of largely stay on course versus pull some of these levers? And you also mentioned that you've signed contracts with the three major commercial players. Um, when do, when do those contracts, um, you know, kick in and, and, and you start to get reimbursement through that?

Yeah. Thanks for the question, Corey. Um, so what, what we, I'll take the second question first and then Scott, if you'll comment on the launch plans and levers that we could pull going forward, but, um, I guess we're going to stick to the script that like in the coming quarters, um, we, we think the, the, the, um, payer landscape will improve. So that's going to be in place to happen and be an accelerant, as we've said. And Scott, maybe you can talk about the levers that could be pulled going forward in terms of launch.

Yeah, sure. So the first thing I'd point out is that I think we have immense opportunity, both from a breadth and for a depth standpoint, to capitalize on. So to take, for example, the amount of breadth, I think we said 350 prescribers have prescribed thus far. But we've also said in the past that we have 6,500 targets across the country. So there's well over 6,000 out there who have not had the opportunity to use eutropia. And from a breadth standpoint, we're just getting started. I mean, we've been pleased to have physicians with one, two, three, four, five plus patients, but many more of them can't have that depth and will have that depth. From an activity sort of lever standpoint, I think one is just fuel the fire. We're going to continue to work with the centers to identify beyond eutropia. We have had community physicians, for sure, that have prescribed, but we will now start to kind of work our way back out into the community to get PAH patients, but also to start to get PHILD patients. And then strictly from a tactical perspective, I mean, we'll be at all the major conferences. We'll be loud from an electronic standpoint. We still have a full suite of launch marketing that's going on right now and will certainly continue to go on for the rest of the year.

Scott, maybe I'll add in terms of like I think all of those activities are clearly going to be beneficial to the brand. I think in terms of the levers, I can think of five just off the top of my head. It's like Scott said, continue to increase breadth and depth of prescribers, especially as we go out into the community centers more because I think in this initial phase we were somewhat focused on the major centers. As we've said, we'll get acceleration from payer engagement and coverage. The third would be that now that there's traction and switch opportunity, maybe try to leverage that more broadly and talk about that experience more widely with prescribers so that they too can benefit from the transition with their patients. I think the fourth level lever would be to focus on eutropia's dosing flexibility to drive durability. I think just as important as starting patients is keeping patients on therapy, and that's obviously going to be a key focus for our commercial enterprise going forward. And then I think we should also now begin to capture this initial data from oral transitions, particularly as they come off of TRAVI, is what we've seen early, and begin to focus potentially on an initiative to support that in terms of how to inform doctors how to do that. So, you know, lots of levers that we can pull all will drive future business. So I think this is, you know, this is a very levered business in terms of what we can accomplish going forward. Operator, next question, please.

Yes, of course. And now we're going to take our next question. And Councilman of Serge Bellinger from Needham, your line is open. Please ask your question.

Hi, good morning and congrats on a great start. Had some technical difficulties this morning. So apologies if you've covered this already. So First of all, on the $6.5 million, can you give us a split between channel inventory and patient demand? Secondly, regarding payer coverage, can you tell us where you're currently at and where you expect to be by the next quarter? And is the coverage similar to Tyveso? I have another follow-up, but I'll start there.

All right, thank you, Serge. Mike, can you answer those questions, please?

Yeah, Serge, thanks for your question. Specifically on the breakdown on revenue, I'd say especially for a first quarter of launch, the vast, vast majority of that revenue was loading the channel. Um, as you can imagine, we, you know, as we previously talked about, we put product into the channel, uh, the first week of June, we dosed our first patient shortly thereafter. Uh, but, uh, you know, just from a pure timing point of view, there would be a lot of that, uh, a lot of that initial revenue would be loading the channel. With that being said, obviously, with the accelerating patient numbers that we've seen, we start seeing stacking of patients as we move into second scripts. The vast majority of that has already been absorbed. As we move into Q3, as we related to pair coverage again, like we've always said, we want to make sure that patients have choice in order for patients to have choice. We need to make sure they have access to you. As I said earlier, we signed contracts with 3 major commercial payers and as those NDC blocks are removed. We feel very confident, as we said, the product profile of Eutrepia to win and to be the process cyclone of first choice, as Roger has stated. Being in a parity situation with United Therapeutics where we are not disadvantaged, and as those kick in, we feel very confident that will be the place that we land and feel very confident in our ability to grow.

Thanks. And maybe one for Rusty, just an update on the 327 program. PAT litigation. I think there was a hearing a few weeks ago. I guess when you expect a potential decision and what the potential outcomes could be.

Thanks. Yeah, thanks for the question, Serge. So, as you know, trial was held back at the end of June. At this point, all post-trial briefing is complete. The judge set a relatively accelerated post-trial briefing schedule, so post-trial briefing is now complete. As far as when we get a decision, it's always hard to predict how quickly courts are going to roll on things. I think in the first Hatch-Waxman trial in front of Judge Andrews, it was about two and a half months between the completion of post-trial briefing and his decision. Obviously, here, he set an accelerated timeline for the post-trial briefing that could indicate that his decision will similarly be a little bit faster than the last time, but again, hard to predict with any with any degree of precision. And then finally, as to the potential outcomes, you know, it's the same outcomes we've been talking about all along. You know, again, as with prior litigations, we won't, you know, probabilize what the outcome is going to be or try to, you know, get in front of the judge and guess how he's going to rule. But it's sort of the full range of, you know, these potential outcomes, you know, consistent with any Hatch Waxman litigation.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1 1 on your telephone keypad. And now we're going to take our next question. And the question comes from Tiago Faust from Wells Fargo. Your line is open. Please ask your question.

Thank you. Let me just add my congratulations as well. A quick one for me, just thinking about United States Studies read-through. kind of what are some of the implications potentially going forward, some debate on orphan drug exclusivity, any implications for eutrapia or for the development test for 606, basically how you guys are thinking about that if that trial reads out positively. Thanks.

Thanks, Tiago. I'll take that. So, you know, I think they've said they're expecting that result in September, so there's really no sense in me trying to predict what that trial result will or won't be. I think if they are successful, they will have some orphan protection for that for a period of time. So I think for us, it would be a matter of developing L606 for that indication so that once that orphan exclusivity expired, that we could benefit from that market too if they are to be successful.

But we'll soon see where that lands.

Thank you.

Dear participants, as a last reminder, if you would like to ask a question, please press star 11 on your telephone keypad. Dear speakers, there are no further questions for today. I would now like to hand the conference over to Roger Jeffs for any closing remarks.

Thank you, everyone, for joining today's call. We appreciate your enthusiasm for this initial phase of launch. We remain laser-focused on the execution in the back half of the year and look forward to driving continued uptake, expanding payer access, and laying in the groundwork for our broader pipeline. And we look forward to speaking with you very, very soon, especially in the fall when we have our R&D day for L606. Thank you again.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.