Q1 2021 Liquidia Corp Earnings Call

Good morning, and welcome everyone to the credit Corporation first quarter 2021 financial results and corporate update conference call. My name is Anthony and I'll be your conference. Operator today. Currently all participants are in a listen only mode. Following the presentation well conduct a question and answer session.

Instructions will be provided the thoughts time for you to queue up for questions anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time.

To remind everyone. This conference call is being recorded on that.

Ill hand, the call over to Jason Napier, Vice President corporate development and strategy.

Please go ahead.

Thank you Anthony.

My pleasure to welcome everyone for today's conference call to discuss our first quarter financial results for 2021 and provide a business update for Ken I'd like to remind everyone that today's call will contain forward looking statements based on current expectations.

Such statements May involve risks and uncertainties that may cause actual results to differ materially from these stated expectations for.

Further information on the company's risk factors, please see liquidity as filings with the SEC at Www, SEC Gov or on liquidity of website <unk> com.

I would now like to turn the call over to Chief Executive Officer, Damian to go up for our prepared remarks, after which he will open up the call for your questions.

Thank you, Jason and good morning, everyone.

I'm joined today by Mike <unk>, our Chief Financial Officer, and several other members of our management team may be helpful. On addressing your questions later on the call.

In the short time since I provided an update in March liquidity has continued to deliver on its plans and expectations at a rapid pace.

In April and May alone, we have delivered on multiple value, creating events, including <unk>.

The expansion of the commercial opportunity for profitable injection.

Our generic formulation of our modular buying.

By enabling subcutaneous route of administration.

The resubmission of the NDA for <unk> 861, putting us back on track for a potential FDA approval.

And strengthening our financial position through an equity capital raise and refinance of our credit facility with Silicon Valley Bank.

These other results of the hard work from our committed dedicated team is helping to establish the reputation for delivering on results.

First you have to get clearance of the RG three ml medication cartridge has removed a major barrier to maximizing the utility and value up to profitable injection.

This achievement by our partner Chengdu, She thing medical technologies.

Demonstrates our commitment to providing valuable products to ph patients in the community who supports them now.

With both the IV and sub Q enabled we.

We expect that the market opportunity for our product for more than double.

Not only as a result of newly addressable sub Q or module on patients, but also due to payers motivation to ensure the effective use of resources across this rare and expensive disease.

No longer will patients physicians and payers to be limited to a single brand of choice for the sub Q administration of to cross Neal due to the restrictions imposed by other companies.

With this obstacle behind US we continue to believe that there are significant addressable market for contact.

The United Therapeutics reported that remodel on sales in the U S of greater than $450 million from 'twenty 'twenty.

We have been encouraged by the level of interest and look forward to providing more updates in the future.

Our R&D and operations team have worked steadily towards resubmitting, the NDA for <unk> 861.

Our dry powder formulation that's profitable.

Last Friday.

We provided the F D. A full response to the items mentioned in the C or G. R. L issued last November.

We believe the data package submitted will speak directly to the items and questions raised by the FDA relate.

Related to CMC.

And Dubai Biocompatibility.

Given that no new data from the clinical trials or in vivo studies was required.

We anticipate that the FDA will classify the resubmitted NDA as a class two resubmission if accepted.

This would establish a six month review cycle from our submission date and potentially enable attended to approval in the fourth quarter. This year.

We look forward to working with the agency over the next few months and are prepared to host them for for a private prior approval inspection.

861 is in a good market position with the potential for growth in new indications.

861 was designed from the start to improve the therapeutic profile up to profitable by enhancing deep lung delivery and achieving higher dose level and current inhaled therapies.

Convenience alone of DPI versus nebulizer.

Should.

Displaced a significant portion of the current nebulizer across the market.

In 2020, United Therapeutics reported high based on sales of more than $480 million with a single indication in who group one patients.

In addition, we believe the higher dosing of our DPI versus current nebulizer therapy as demonstrated on our in our clinical trials.

Would prolong the duration of inhaled treatment for print before patients transition to more invasive parenteral administration.

As the market for inhaled profitable delivery expense, new indications, we believe that 861 will be well positioned.

The recent approval of nebulizer based though to treat patients diagnosed with pulmonary.

Pulmonary hypertension associated with interstitial lung disease is meaningful in that it demonstrates inhaled inhaled <unk> ability to address another pulmonary hypertension patient population with an unmet need.

It would be our intent to volatile low end of that expanded indication.

We plan to discuss with the agency, whether and when we could include ph ILD and the 861 label.

As you know we are actively involved in hatch Waxman litigation brought by United Therapeutics, as well as pursuing inter parties reviews for IPR.

On a certain related patents that the U S patent trial and appeal Board.

We continue to maintain that for three patents asserted against us are not infringed and are invalid.

While we will not comment in detail about specific actions along the way we remain confident in our position.

We have taken several actions in last for months to improve our balance sheet by reducing annual net spending increasing our cash position and.

And in the process, adding a new member to our board of directors.

As described in March management has already implemented measures to reduce net annual spending in 2021 on more than 40% compared to 2020.

The company refinanced its former credit facility, eliminating more than $10 million and required principal repayments over the next two years.

While providing access to an additional $10 million upon the achievement of certain regulatory milestones related to 861.

The refinance that complements our most recent financing.

Of $21 7 million from the sale of common stock.

New and existing investors.

Not only do we benefit from the approved cast as Justin.

But we are very excited to welcome David Johnson, a partner and co founder of Calgon partners.

Liquidity our board of directors.

Kal Calligan led the private placement of shares and Mr. Johnson has closely followed liquidity over the last year.

We look forward to support in future discussions.

With this financial discipline and strategic focus in mind, we have recently decided to terminate the development of <unk> 865.

On a sustained release formulation of bupivacaine.

Targeting the treatment of local post operative pain.

We attempted department program, but we're unable.

I've chosen to focus internal resources on maximizing the value of our ph asset.

And to build a pipeline synergistic with our expertise in cardiopulmonary and rare diseases.

At this time I'll turn the call over to Mike to review, our first quarter financial summary.

Yes.

Thank you Damian and good morning, everyone.

Our first quarter 2021 financial results can be found in the press release issued earlier today on our form 10-Q to be filed with the SEC later today, both of which will be available on our website.

To briefly summarize we recognized revenue of $3 $1 million for the first quarter 2021, as compared to no revenue in the first quarter last year.

The revenue recognized in 2021 relates to our promotion agreement with Sandoz in support of <unk> injection as a result of the acquisition in November 2020 erosion. Our wholly owned operating subsidiary now referred to as liquidity of T. H.

Cost of revenue during the first quarter was <unk> 7 million.

Compared to no cost of revenue for the first quarter of last year prior cost of revenue recognized during 2021 related to the promotion of leaving as previously noted.

Research and development expenses decreased to $6 1 million for the first quarter of 2021, compared with $10 8 million for the first quarter of 2020.

Decrease of $4 $7 million or 44, 1% primarily related to lower expenses from our liquidity. It takes one clinical program, which was substantially completed prior to filing the NDA last year lower expenses from our <unk> clinical program and lower expenses related to employees and consultants.

General and administrative expenses increased to $5 $3 million compared to $3 8 million for the first quarter of last year. The increase of $1 5 million or 39, 6% was primarily due to $2 $1 million higher legal and professional fees associated with our corporate activities as well as our ongoing 861 related litigation.

Set by lower consulting and personnel expenses as a result of lower head count year over year the net.

Net loss for the quarter ended March 31, 2021 was $9 $2 million or 21 cents per basic and diluted shares.

For it to a net loss of $14 $8 million or <unk> 52.

Per basic and diluted share for the quarter ended March 31 2020.

Cash totaled $53 $6 million and $65 $3 million as of March 31, 2021, and December 30 of 2020, respectively.

These cash figures do not reflect the $21 $7 million in gross proceeds raised in April from the sale of common shares in a private placement.

As you look further into 2021, we expect our net cash burn in future quarters to continue to degree decrease a reflection and a reduction in spending we believe that cash burn will will be further reduced by the anticipated positive contribution from the profit split arrangement with sandoz on the sale of Coprostanol injection, while we expect your possible injection unit sales too.

Significantly it is worth noting that our share of profit split with Sandoz has the potential to day to decrease from <unk> 80 per cent to 50% once we exceed our contractual cumulative revenue threshold, which we estimate maybe in the fourth quarter of this year we.

We will not be providing any specific revenue guidance. However, we are confident that the newly enabled subcutaneous administration of <unk> injection will help contribute more than our previous estimate on mid to high single digit millions.

I'll provide updates on future calls should this change in any material way.

With a strong balance sheet.

And access to the credit facility, that's B B, we feel well positioned to deliver on our potential value, creating events related to regulatory approval and litigation activity in 2021, and 2022 I would now like to turn the call back over to Damien.

Thank you Mike.

Before ending our prepared remarks, I thought it would be helpful to reinforce our corporate priorities that we see very clearly in 2021.

They are.

Maximize the revenue from <unk> injection with the launch of the subcutaneous route of administration.

Advance I like you a six one successfully through the FDA and the ongoing litigation.

Reinforced the financial discipline established by the management team Andrew.

And remain on opportunistic in our pipeline to drive near term and long term value for shareholders.

Thank you for listening in and I would be pleased to take any of your questions now.

And in order to ask a question I will need to press star one on there's all the phone and to withdraw your question for the parent Keith from.

Please standby hold compile the Q&A queue.

And your first question comes from the line of <unk> can be Skanska, Inc. From Jefferies. Your line is now open.

Morning, Damian this is a combi zone for Chris.

I guess the three questions for me.

Can you tell us a little bit more about your expectations for the sub Q opportunity.

And <unk>.

Impact your revenues.

Sure.

If you have any expectation that second question on if you have any expectations out of the claims construction.

On nine.

The third question is would you develop.

Or would you potentially develop ph ILD.

Label expansion on a parallel timeline with the litigation or pursue that opportunity. After some sort of a litigation resolution. Thank you so much.

Thanks, Tom and let me try to address those one by one if I can.

First of all in terms of the sub Q opportunity I think as Mike said, we are confident we do think it's going to expand obviously the universe of the addressable market is at least double if not more.

Think that in the past, we haven't been able to get as much payer support as you would expect for a very high price rare orphan disease drug where theres a generic option that's available at a at a significant discount and I think now that we've been able to address both routes of administration.

That that's going to provide some additional payer support but as Mike also noted we do have a little bit of a headwind in the context of.

Our profit split will decrease theoretically depending on when we reached the threshold from 80% to 50%, which is which is significant so even though we're going to increase volume and do all of that from a P&L perspective revenue will obviously you don't have the adjustment from the from the profit split that we'll have to we'll be overcoming.

In terms of the claims construction I don't think that we have anything in particular to comment on at this point I think it's.

We believe that we're prepared for it and.

Expect a good resolution there I would just note that.

It has been delayed due to due to court scheduling I think it's now June for so.

You mentioned this month than it was originally scheduled for this month, but is now postponed till next month.

And then in terms of ph ILD, we're already we've already reached out to the FDA reviewer.

Reviewer to ask and start having discussions with them about what does it mean now that <unk> had.

Additional expanded label.

As we've heard at least from the United Therapeutics.

Releases.

There are time based on DPI that's gone in.

Was for both indications and so I think they have every intention of trying to get at.

Approved at this first pass.

For both indications and so I guess I would say that we're.

We're focused on whatever the FDA recommends, but we've already initiated that dialogue.

Alright, thank you so much Damian.

Thanks.

And your next question comes from the line of Yours for better.

<unk> from Wedbush. Your line is now open.

Hi, the push from the on plenty on how much.

Thank you for pulled from my question.

Go for.

From that was submitted for the deal.

For those folks on.

On the Resubmission.

Yes. So this was related in relation to the CRM as we've kind of commented in the past majority of that was was in the CMC area and the device biocompatibility.

Sections, and so in terms of the device biocompatibility.

The typical device.

Information for studies that you would need to do we've chosen to redo all of those and we did that and provided a complete and robust package related to that and then relation on CMC. As you do know this is a new technology from a manufacturing perspective, and so there's certainly some questions around that that we were addressing and I think.

As you know we didn't have the benefit of a P. AI during the original submission review and which maybe would have.

Offered an opportunity for us to address some of those during a kind of an interactive discussion, but nonetheless, it was centered around CMC and device biocompatibility.

Alright, thank you.

And again, if you would like to ask a question just press star one on your telephone keypad.

And there are no further questions at this time please continue.

Okay, well I would like to thank everyone for joining and please stay tuned in the future as we continue to provide.

Positive updates of our execution and delivering 861, and two cross channel injection into the market and then looking for other opportunities that will leverage our print technology <unk>.

At opportunities or assets into the pulmonary hypertension area.

For joining.

This concludes today's conference call you may now disconnect for centers. Please stay on the line for the post conference.

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No.

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For years.

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Yes.

Okay.

Neal.

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