Liquidia Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 7, 2024

There are 9 speakers on the call.

Operator

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 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 now like to remind everyone this conference call is being recorded. I will now hand the call over to Jason Allaire, Chief Business Officer. Please go ahead.

Speaker 1

Thank you, Lisa. It's my pleasure to welcome everyone to Liquidia Corporation's Q2 2024 Financial Results and Corporate Update Call. Joining the call today are Chief Executive Officer, Doctor. Roger Jeff Chief Operating Officer and CFO, Michael Cassetta Chief Medical Officer, Doctor. Rajeev Sager Chief Commercial Officer, Scott Mumma and General Counsel, Rusty Schundler.

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 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?

Speaker 2

Thank you, Jason. Good morning, everyone. Thank you for joining us today. While we and patients still anxiously await FDA action on the Eutrepia NDA, seeking approval for both PAH and pulmonary hypertension associated with interstitial lung disease or PHILD. We remain hopeful that we are close to achieving this.

Speaker 2

As a reminder, the FDA has had no legal impediments since April 1 to take action on the amendment as submitted, seeking approval for both the age and p and child DD. What I can say today is that we have been in active and constructive communication with the FDA over these past 4 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 credit to launch EUTREVIA 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.

Speaker 2

Moving to our clinical programs. The open label ESSENCE study of UTREPA 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 OTREVIA to escalating therapeutic levels in these PHILD patients. While the ASCEND data needs to mature more, our early patient experience today suggest that the benefits of PRINT formulated treprostinil delivered via low effort inhaler parallels a very good experience observed in PAH patients. For example, the median dose of betrovia for patients currently enrolled beyond 8 weeks in the ASCEND trial is 185.5 micrograms per treatment session or approximately 21 breath equivalents of Tyvaso per session with a top dose of 3 18 micrograms or approximately 36 breath equivalents.

Speaker 2

These doses are several orders of magnitude beyond the recommended 9 to 12 breath dose targeted Tyvaso and exemplify the paradigm shifting potential of OTREVIA for PH and PH IONV patients, especially as it relates to tolerability and potentially durability. We plan to submit additional clinical data from the ASCEND trial at future medical conferences, Some more to come on that. With respect to our sustained release liposomal formulation of inhaled reprisal L-six zero six, the preliminary safety data and exploratory efficacy data from the first 28 patients switching from Tyvaso or Tyvaso 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 L-six zero six, likely attributable to the 7 fold lower Cmax, but with a similar systemic exposure over a 24 hour period compared with a 4 times a day dosing of inhaled treprostinil, all while using a rapid portable handheld breath actuated nebulizer. 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 feedback from our Type C meeting in December.

Speaker 2

While we continue to observe these patients in the OBLENDO study, our focus will now shift to our efforts to initiate the registration on global trial in patients with PH ILD later this year. At this time, I will turn the call over to Mike to summarize the Q2 financial results.

Speaker 3

Thank you, Roger, and good morning, everyone. Will briefly address our Q2 financial results found in today's press release. As you will see, revenue was $3,700,000 for the Q2 2024 compared with $4,800,000 in the same quarter 2023. Revenue tied to our promotion agreement with Sandoz to commercialize treprostinil injection. The decrease is primarily due to lower sales quantities in the current year as compared to the same period in the prior year.

Speaker 3

Cost of revenue increased to $1,500,000 for the Q2 2024 compared to $700,000 in the same quarter for 2023, with the increase being primarily due to our sales force expansion during the Q4 2023. Research and development expenses were $9,400,000 in the Q2 of 2024 compared with $17,700,000 in 2Q2023, which included a $10,000,000 upfront license fee to Pharmosa for the exclusive license to L-six zero six in North America. We saw a $1,400,000 decrease in expenses related to our Eutrepia program driven by expensing pre launch inventory costs in the prior year. These decreases were offset by a $1,700,000 increase in clinical expenses related to our L-six zero six program and a $1,500,000 increase in personnel expenses related to increased headcount. General and administrative The increase of $10,800,000 was primarily due to a 6,300,000 The increase of $10,800,000 was primarily due to a $6,300,000 increase in personnel expenses, which includes stock based compensation, a $2,200,000 increase in commercial and consulting expenses and a $900,000 increase in legal fees related to our ongoing utrepia related litigation.

Speaker 3

In summary, we incurred a net loss for the 3 months ended June 30, 2024 of $27,900,000 or $0.37 per basic and diluted share compared to a net loss of $23,500,000 or $0.36 per basic and diluted share for the 3 months ended March 31, 2023. We ended the Q2 of 2024 with $133,000,000 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.

Speaker 2

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 Utrefeo with a team of dedicated professionals who are poised to reshape and grow the market for inhaled treprostinil on neutropia's approval. The market opportunity for inhaledraprostenal is currently at a $1,500,000,000 run rate with the potential to grow dollars in excess of $3,000,000,000 in the coming years. This market remains keen for a competitive alternative, especially one with the dosing and tolerability advantages that eutrepia can potentially provide once approved.

Speaker 2

With that, I would now like to open the call to questions. Operator, first question please.

Speaker 4

Thank

Operator

And our first question today comes from Julian Harrison of BTIG. Your line is open.

Speaker 5

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 treprostinil exposure should be beneficial both in PAH and PHILD?

Speaker 2

Yes, Julien. 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 prostacyclin that and one of the beauties of continually titrate to continually titrate to effect 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.

Speaker 2

So if you look at treprostinil in its various forms, parenteral, oral, inhaled, you can see that the ability to titrate is a hallmark of the therapy. But what had been limiting prior to new neutropia in particular, as you see with Tyvaso, is the inability to titrate above a fairly low therapeutic ceiling. So what neutropia has done, and this is why I say it's paradigm shifting, is 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 dosed to effect also while minimizing the side effects. So I think this is why we're so excited about Eutrepia.

Speaker 2

We think it brings a different sort of utility to the marketplace in terms of treprostinil use. And we think this therapeutic profile will lead it to become both best in class and first in choice when considering starting the prostacyclin, be it parental, oral or inhaled. Rajiv, I don't know if you have any additional comments.

Speaker 4

Yes. Julien, yes, I think Roger answered most of it correctly. I would just sort of add is that we learned a lot from the INCREASE study in PHLD. I think in that study, the data highlighted that patients that achieve more than at least 9 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 this is a very heterogeneous group of patients both in PAH and PHLD with various degrees of severity.

Speaker 4

And in many of these patients, the disease, as Roger highlighted, it's 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.

Speaker 2

Great. Thank you, Prasik. Thanks for the question.

Speaker 6

Okay. Great. And one more if

Speaker 5

I may. I was just curious if you have a good sense for when we might expect a comprehensive data disclosure from the ASCEND trial? And can we maybe review what the key unanswered questions are that you plan to address with that trial?

Speaker 2

Yes. Maybe Rajeev, if you could comment on that.

Speaker 4

Yes, Julien. So again, just to remind everyone, Ascent is a study studying the safety and tolerability and the secondary outcomes would be exploratory efficacy of utrepia in patients with PHLD who have not been treated. The 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 1 year. So what is very important here in this study is that what we're looking for is to maintain the patients on a the optimal dose of utrepia and also to show durability because what we do know is that after 16 weeks in the INCREASE study, many of these patients start to have significant amount of instability.

Speaker 4

So we wanted to show patients definitely have durability. Our focus really coming out in 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 walk distance in terms of 6 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 utropia.

Speaker 4

I just want to highlight, as Roger said, is that at least right now, the median dose for those patients now past the 8 week mark is now 185.5 micrograms of utropia. This is just to highlight that if you compare this to our SENTINEL INSPIRE study in PAH, by 2 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 utrepia 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 patient. And I think we look forward to highlighting some of these clinical parameters in the very near future.

Speaker 2

Thanks, Rajeev. So Julien, 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 2025.

Speaker 5

Operator? Excellent. Thank you again. Welcome.

Operator

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

Speaker 7

Hi, good morning. Thanks for taking my question. I had a couple of legal ones. First one on the UT case against FDA. I believe in the motion for dismissal both the agency and Liquidia completed their briefs.

Speaker 7

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 Eutropia NDA?

Speaker 2

Thanks. Great, Serge. Thanks for the question. Rusty?

Speaker 8

Yes, Serge, thanks for the question. So on the 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. We don't have an indication either way yet from the court.

Speaker 8

So really can't provide any guidance there just because we're waiting for the core to decide on that. On the second point, 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 not to comment on our communications with the FDA. So obviously, once the FDA has taken definitive action, obviously, we will announce that. But in the meantime, we're not going to comment on our communications with the FDA.

Speaker 2

Thank you. Thank you for the question Serge.

Operator

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

Speaker 3

Good morning, team. For the registrational study for L-six zero six, 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 STEN study. How many more sites have you onboarded since the last update? And how many patients so far have you treated in the ASCEND study?

Speaker 3

Thank you.

Speaker 2

Questions. Rajiv, both of those are in your court, please.

Speaker 4

Yes. Hi, Kamish. So regarding the global single placebo controlled efficacy study with L606 specifically in patients with palmar 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 do all the necessary steps to make sure that our protocols are properly submitted and viewed by agencies as Roger highlighted.

Speaker 4

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 6 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 treprostinil, I think, RELI 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.

Speaker 4

So we remain very excited about the feedback that KOLs throughout the global market has been showing for support of the study. There's extremely significant amount of unmet need, I think definitely outside the U. S. In addition to the U. S.

Speaker 4

In that regard. In terms of Ascent, we have 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.

Speaker 4

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 have we'll be on full ramp to support the rest of the study.

Speaker 2

Great. Thank you, Rajiv. Thanks for your questions, Kamby. As you can see, really positive data flow from both the L-six zero six open label study and the ASCEND trial. We're obviously very excited to get into the registrational study with L606 in PHIL patients, as Rajiv said.

Speaker 2

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 a 2 times a day format, that's an exciting Phase III program with a very positive predictive future. Same for the ASCEND trial, I think when you see this rapid ability to dose these patients, quite differentiating and I think something that the market will lean on once we get to market. So thanks for the question, Kambi. Next question, please.

Operator

Thank you. And one moment for the next question. Our next question will be coming from the line of Matt Kaplan of Ladenburg Thalmann. Your line is open.

Speaker 2

Hi, good morning guys. Thanks for taking the question. I guess 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.

Speaker 7

Thanks for the question.

Speaker 2

As I said in the interim, 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 would be in April 1, 4 months past that. And while that's frustrating, I think in if you want to put a positive spin on that, it's 4 months is in the rearview mirror. So it's been 4 months to work to a solution. So we think we're that much closer to a decision and an action.

Speaker 2

And we won't comment on direct communications for 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 that's 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. So apologies that I can't get specifics, but hopefully we'll have an action soon and we can talk that in great detail with you.

Speaker 2

Operator, next question. Yes, Noah.

Operator

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.

Speaker 6

Hey guys, good morning. Thanks for taking my questions. So 2 for me. Just on the cash burn language in the 10 Q about roughly around a year of cash runway. I assume that that assumes an approval and launch costs.

Speaker 6

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 Citizens petition. Is there any plans to submit any, correspondence clarifying LGM's role as an porter? Or 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.

Speaker 2

Yes, great. Thanks, Jason. So, Mike, if you'll address the cash burn question and rest of you could talk to the citizen's petition, please.

Speaker 3

Yes. So Jason, thanks for the question. I mean, I think where we sit now, we are sitting at $133,000,000 of cash. We're very confident in our cash position. We talked about all of our objectives for the rest of this year and going forward with Ascent without getting L606 initiated and also supporting a launch of utrepia.

Speaker 3

We've always taken pride of having a strong balance sheet. We feel that we still have that and we're very confident in our ability to deliver. Now with that being said, we'll always focus on what's at hand and depending on where things stand, we will 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 Eutrepia launched, getting L-six zero six pivotal trial initiated and continuing the ASCEND trial.

Speaker 3

So 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 Eutropia launch here in the not too distant future.

Speaker 8

And Jason, thanks for the question on the citizen's petition. We do not currently anticipate filing a public response to the citizen's petition. Obviously, any issues that there would be direct communications between us and the FDA, which as Roger said before, we won't comment on. The other thing I'd point out is, I mean, even United Therapeutics had filed an amended citizen's petition to cure some of the misstatements on the original citizen's petition. That is public.

Speaker 8

But again, we won't have a public response or at least we're not anticipating 1 at this time.

Speaker 5

All right.

Speaker 4

Thank you.

Speaker 2

Thank you, Jason.

Operator

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

Speaker 2

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

Operator

Thank you for joining today's conference call. You may disconnect.

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