Liquidia Q3 2023 Earnings Call Transcript

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November 7, 2023

There are 10 speakers on the call.

Operator

Good morning, and welcome everyone to the Liquidia Corporation Third Quarter 2023 Financial Results and Corporate Update Conference Call. My name is Therese, and I will be your conference operator today. Currently, all participants are in a 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 up for questions.

Operator

I would like to remind everyone that this conference call is being recorded. I will now hand the call over to Jason Adair, Chief Business Officer.

Speaker 1

Thank you, Sherry. It's my pleasure to welcome everyone to Liquidia's Q3 2023 financial results and corporate update call. Joining the call today are Chief Executive Officer, Doctor. Roger Jeff Chief Financial Officer, Michael Cassata Chief Commercial Officer, Scott Mumma Chief Medical Officer, Doctor. Rajeev Sagar and General Counsel, Rusty Shundler.

Speaker 1

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'd now like to turn the call over to Roger for our prepared remarks, after which he will open up the call for your questions.

Speaker 2

Thank you, Jason. Good morning, everyone, and thank you for joining us. The Q3 was marked by continued and positive steps to change the future of the company, The pH market and the lives of patients we are committed to serve. We have built a portfolio that we believe includes the most promising products in the fastest growing area of the PH Marketplace and hilteprosoinib for the treatment of pulmonary arterial hypertension or PAH and pulmonary hypertension associated with interstitial lung disease for PHILD. Many of you know already that Eutrevia, our dry powder formulation of treprostinil using a low effort, Simple to use pocket sized dry powder inhaler has the potential to be the 1st and best choice when adding the prostacyclin to a patient's treatment measurement.

Speaker 2

In support of this, a recent summary from our open label clinical experience shows how durable and titratable new TROPIA treatment can be, where we've treated patients for as long as 5.5 years and have titrated to doses now equivalent to 30 breaths of Tyvaso 4 times per day. I want to emphasize dose matters as it has been demonstrated across all routes of prostacyclin use that higher doses equate with better patient outcomes. UTREPA's ability to dose higher has the potential to significantly broaden and improve upon the therapeutic index and utility of inhaled treprostinil administration as it currently exists. At the same time, we've seen promising early evidence Clear benefits in our sustained release inhaled treprostinil program called L-six zero six. This liposomal formulation delivered in 2 administrations per day offers more consistent drug exposure throughout the day, including during sleeping hours.

Speaker 2

Each dose is delivered in approximately 1 minute using simple tidal breathing with a portable next generation breath activated nebulizer. We have plans to share data at conferences in 2024, But our preliminary data suggests that patients in the open label study who have transitioned from Tyvaso have been able to safely titrate to higher doses, including daily doses comparable to 25 breaths of Tyvasa 4 times per day without We very much look forward to sharing more details on the development and registration path for this program during our future earnings calls, which will be informed by our Type C meeting scheduled with the FDA next month. While we are very excited about our L-six zero six program, We recognize that most of our investors' attention is focused on near term legal events. The good news is that legal story has now become greatly simplified. There is just a single patent, the 793 patent that currently supports the injunction preventing the FDA from granting full approval of UTREVIA.

Speaker 2

All claims of that patent were found to be invalid by the Patent Travel Appeal Board or PTAB. The PTAB's favorable decision is currently being appealed by United Therapeutics with oral arguments scheduled for December 4. We expect the decision could be issued as quickly as a few days after oral argument if some reaffirmance is granted or within just a few months after oral argument, the formal written decision is provided. Regardless, if the PTAB's decision is affirmed, We will immediately seek to have the injunction lifted and request final approval from the FDA. In the event of such an approval, We will execute on our plan to change the landscape of the PAH market as quickly as possible.

Speaker 2

For this reason, I have asked Scott Mumma, our Chief Commercial Officer,

Speaker 3

Thanks, Roger. As a brief introduction for those that I have not yet met, I've had more than 20 years in the pharmaceutical industry, Building commercial teams and launching products. I spent 13 of those years in the pulmonary hypertension market, including leading the marketing of treprostinil products, Remodulin, Tyvaso and ultimately the launches of Orenitram and treprostinil injection. 2 years ago, I joined Liquidia when RareGen, a company I co founded with Roger and others, merged with Liquidia. Since then, I've been building our commercial strategy and our team for the upcoming potential launch of Eutrepia.

Speaker 3

We've really built a strong senior commercial management team across marketing, Market access and sales leadership. On the marketing and market access side, our team is ensuring that patients who are prescribed utrepia will be supported by a full suite of services, including high touch specialty pharmacy services, a patient access program and a copay card program. On the sales side, very exciting. Just last month, we were pleased to complete the onboarding of our field force of about 50 sales reps who share my passion for helping patients suffering from rare diseases. Collectively, our sales team has an average of 9 years selling rare disease products with the majority of the team having sold pH products previously.

Speaker 3

The team is now in the community and academic center offices, increasing the awareness of Liquidia In supporting treprostinil injection more widely than ever, we want all physicians to know that Liquidia is here for patients at any stage of their disease progression. As a result of our preparation to date, I am proud to say that Liquidia is ready and well positioned to launch UTREPIA in both PAH and PHILD upon final FDA approval. With that, I'll pass it over to Mike to review the last quarter's results. Mike?

Speaker 4

Thank you, Scott, and good morning, everyone. Our Q3 2023 financial results can be found in the press release and the 10 Q filed this morning. As you will see, Liquidia continues to operate and spend on value creating activity in a judicious manner. We ended the 3rd quarter with $76,200,000 in cash, equating to a net burn of $17,100,000 over the 1st 9 months of this year. During the quarter, revenue from treprostinil injection increased $500,000 compared to the same quarter Due to favorable gross net chargeback and rebate adjustments, which offset lower sales quantities compared to the same period in the prior year.

Speaker 4

Cost of sales decreased slightly to $600,000 as compared to Q3 2022, primarily due to lower intangible asset amortization due to the extension of our agreement with Sandoz to commercialize treprostinil injection. R and D expenses in the quarter were $7,400,000 an increase of $2,900,000 compared to Q2 2022 and included increased spending to build pre launch commercial supply, advance the recently licensed L-six zero six clinical program and support headcount increases. General and administrative expenses were $10,600,000 for the Q3 of 2023 compared to $6,700,000 for the same quarter in 2022. The increase of $3,900,000 primarily driven by legal fees related to our ongoing litigation, personnel and commercial expenses in preparation for the potential launch of utrepia and an increase in stock based compensation expense. As we look into December and the year beyond, we will continue to apply the same financial discipline to manage through the timeline of legal and regulatory events, while also being opportunistic as those events unfold.

Speaker 4

I'd like now to turn the call back over to Roger.

Speaker 2

Thank you, Mike. I hope investors can hear our enthusiasm and level of excitement. We are now fully prepared to enter the marketplace And upon approval, promote the full benefits that Eutrevio can provide to patients in their journey to feel better. With that, I would now like to open The call for questions. Therese, first question please.

Operator

Thank you. Our first question is from Greg Harrison with Bank of America. Your line is open.

Speaker 5

Hey, good morning, guys. Thanks for taking the question. Wondering how you're thinking about the opportunity In PHILD, in terms of size of the addressable market and any segments that would be a focus for your efforts? And are there any learnings you've gained from your competitors' launch in IOD?

Speaker 2

Yes, great question, Greg. Thank you for the question. Scott, if you wouldn't mind, if you could give your commercial view of that question?

Speaker 3

Yes, sure. So, we feel like the market for PHILD, the prevalent market is about 60,000 patients. And we all know that there is a significant potential here because of the unmet need. We think that actually 2 companies in this space educating Center physicians, you probably see these patients already, but also community physicians, who may see these patients but not recognize it, Should grow that market quickly. So we're excited about it.

Speaker 3

We think it's all addressable. Rajeev can chime in if he sees that differently, But we think that we have a significant potential here.

Speaker 2

Yes. Rajeev, any further comments on that?

Speaker 6

Yes, Greg, just to highlight regarding the type of patients and the classification of these patients. As you There's over 200 different types of interstitial lung diseases. We obviously are still learning which one of those continue to unfortunately develop this condition of palmar hypertension, but I think we remain focused on identifying broad categories, Idiopathic interstitial pneumonia as autoimmune diseases, hypersensitivity pneumonia, these are the categories inclusive of combined pulmonary fibrosis Seema that pretend to develop pulmonary hypertension. So focusing on earlier diagnosis and earlier treatment Opportunities we believe will be quite impactful for these patients and also the physicians who are treating these cohorts.

Speaker 2

Great. Thank you, Scott. Thank you, Rajeev. Operator, next question.

Operator

Thank you. One moment. Our next Question comes from Serge Belanger from Needham. Your line is open.

Speaker 7

Hi, good morning. Thanks for the updates. First one on the L-six zero six program. So going into the Type C meeting next month, What are your expectations in terms of what is needed to get to

Speaker 6

a

Speaker 7

filing The open the ongoing open label trial, would that support a filing or you think you'll need to conduct placebo controlled studies in both PAH and PHILV. And then second question, maybe for Scott, maybe Kind of a follow-up on the previous PHILD question. Maybe just talk about How different the subscriber base is for PAH and PHILD? How much overlap there is between the 2?

Speaker 2

Yes. Thank you, sir. And Steve, if you wouldn't mind talking about our at least preliminarily our Registration strategy and kind of what we see as the path forward and what we're discussing with the FDA. Sure. ILD.

Speaker 6

Sure. Thanks, Serge. So as we've discussed on prior calls, the goal of this Type C meeting with FDA, our overall Clinical program is to discuss with them what is the path to regulatory approval. We believe that Our proposed clinical paradigm of advancing a single Phase 3 study In PHLD, that's placebo controlled using L-six zero six, achieving a robust primary endpoint will lead The ultimate approval of both PAH and PAH LD in the near future. And that will be inclusive of Adding the safety profile of the open label ongoing study, VAL-six zero six that's currently enrolling to date.

Speaker 6

Scott?

Speaker 3

Yes. So the PHA ILD, HCP market. It's as you might expect, the pH centers, the centers of excellence, the Dukes, the Mayo's, etcetera, Not only treat PAH, but they treat PHILD as well as the other forms of pulmonary hypertension. And then you have what's usually just labeled Community physicians, mostly pulmonologists, that are treating ILD, but may not be diagnosing or treating Some of the numbers that we see, if you think about us having 5,000 targets overall, It would be maybe 2,000 of those targets would be doctors who do not prescribe prostacyclins or the more serious PAH So you would infer from that that they are not treating PH ILD. So we're sized To cover all of those more than adequately and so the goal in the 2 different segments is a little bit different obviously.

Speaker 3

When you're in the centers, you want to make sure that they're reaching for our drug. But when you're in the community, you want to make sure that they are aware of the severity of PHIL D and the probability of PHIL D and then that they're diagnosing it and if they'll treat it, that's great and if they won't, let's make sure that that

Speaker 2

Thank you, sir. Operator, next question.

Operator

Thank you for the question. Our next question comes from Kambi Ziyosdi from Jefferies. Your line is open.

Speaker 8

Good morning, team. Roger, in the past, you've kind of discussed UTREPA potentially being kind of a Prosthesis cycling of First Choice, maybe you could expand on that thought, especially ahead of potential launch soon? And then as a second question, can you remind us what is the status of the 61 that could have used patent? Thank you.

Speaker 2

Thanks for the question, Kambi. So maybe Rajeev, maybe if you could talk about the pillars of new TROPIA that will help position it as the And then Russi, you can talk about the status question, if you will. Rajiv?

Speaker 6

Sure. Thanks, Khambhi. So first, just to rehighlight, we remain quite enthusiastic about Eutropia Using our print formulation, as well as a low resistance device, We believe that this will be quite differentiated in the market, especially in the PHLD market. We have always Discuss that some of our key pillars that UTREPA offers are improved tolerability. As Roger alluded to, dose does matter and we continue to highlight that eutrepia remains quite titratable In our open label extension study, which is known as INSPIRE study, we have now reached doses, equivalents of 30 breaths of Tyvaso 4 times a day, which is just quite remarkable to see these high doses being used safely in these patients.

Speaker 6

And we believe all of these will portend to improve clinical outcomes for patients both in PH and PHLD. And most importantly, We show durability with the use of utrepia with now patients being exposed for as long as up to 5.5 years, which We believe highlights the durability and compliance with this with utrepia itself in this population.

Speaker 2

Great. Thank you, Rajeev. Russi, if you'll speak to the status of the patent.

Speaker 9

Sure. And thanks for the question, Khambhi. So the 61, I think you're referring to the patent application that received a notice of United Therapeutics patent application that received a notice Back in late June that we issued an 8 ks about. As of today, that patent still has not issued, and they have not yet received a notice of issuance. That's a little bit atypical for it to take that long for that patent issue.

Speaker 9

So we're not we don't have visibility as to what's going on at the United States Patent and Trademark Office With respect to that patent, however, what I will say is, we're anticipating that we'll issue, we're preparing for it to issue and we'll be ready to address

Speaker 8

Great. Thank

Speaker 2

you, Rusty. Operator, next question?

Operator

Thank you for your question. Our next question comes from Julian Harrison of BTIG. Your line is open.

Speaker 5

Hi, good morning. Congrats on the progress and thank you for taking my questions. I have some related to the last one just to ask on the PHILB patent. United received a notice of allowance for back in June. I guess after the FDA designated PHI, the Inclusivity expires for United end of March next year.

Speaker 5

Could this patent or patent application have any relevance to Eutrepia's eligibility To receive full approval on PHILD, assuming you already have full approval on PAH at that point?

Speaker 2

Yes. So I'll speak to the regulatory component. So in terms of we have a PDUFA date, Julian, of January 24, 24, For, PHIL D, the amendment that we filed in July, there would be no implication in terms of Getting a tentative approval, which would be granted at that time because market exclusivity does not expire until end of March 24. So we don't see any gate between whatever may happen with that patent and the regulatory approval process. Rusty, you want to speak about the commercialization post that?

Speaker 9

Sure. So Julien, thank you for the question. So To be clear, there would be no 30 month stay that attaches to this new patent. So the only way it would potentially have an impact would be if United Therapeutics is able to go into court and convince a judge that they should get some sort of an injunction to prevent us from launching. As I think we said in the last call, Looking at this patent, looking at how this patent compares to the 793 patent and the numerous studies that were done by medical professionals Between the launch of Tyvaso and the date that this new patent was filed, we think there's a lot of prior art.

Speaker 9

Obviously, if they assert it, which we anticipate they will, we'll have to deal with that in court. But again, the only way it would impact is They're able to convince the court that notwithstanding all that prior art, they should be entitled to an injunction.

Speaker 5

Very helpful. Thank you.

Speaker 2

Thanks for the question, Julian. Operator, next question.

Operator

I am showing no further questions at this time. So I would like to turn it back to Roger Jupp.

Speaker 2

Thank you, Therese. So I intentionally let the team answer most of the call today because I wanted the Investors to hear the depth and quality of the team that we have that are ready and very excited about launching new trends in the very near future. The other thing that you can hear is the quality of UTREPRI's product profile and its potential to quickly differentiate and become The prostacyclin of 1st choices as Compu has asked about. We thank you for joining us today and we look forward to continuing to update you on our progress as we bridge to these important value inflecting events. Thank you.

Operator

This does conclude the program. You may now disconnect.

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