Q2 2021 Liquidia Corp Earnings Call
[music].
Good morning, and welcome everyone to the liquidity of the Corporation's second quarter 2021 financial results and corporate update conference call. My name is Angie 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 and instructions will be provided at that time.
You to queue up for questions. If anyone has any difficulty hearing the conference. Please press star zero for operator, it's true.
The issue at any time.
I would like to remind everyone that todays conference call is being recorded I would now like to hand, the conference over to Jason The Adair Vice President corporate development and strategy. Please go ahead Sir.
Thank you Angie it's my pleasure to welcome everyone to today's conference call to discuss our second quarter financial results for 2021 and to provide a business update.
Before we begin I would 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.
For further information on the company's risk factors. Please see liquidity of filings with the Securities and Exchange Commission at Www, SEC Gov or on liquidity as website at liquidity of Dot 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 members of our management team who may help address questions later on the call.
My comments today will be brief and consistent with the release issued earlier today.
What I can confidently say is that in the 7 months since I assumed this role of CEO. We have delivered on every objective we set forth.
We immediately addressed and increase the financial stability of the company focusing it on value creating activity.
We increased the value of our cross sell of injection product by securing the FDA clearance and launch of the RG 3 ml medication cartridge that enables the delivery of <unk> injection by subcutaneous route of administration and more than doubled the addressable market for that product.
We promptly resubmitted the NDA for <unk> <unk> 6.1.
Now with the <unk> day action in November.
And we continue to engage in multiple work streams to defend our legal right to provide choice and options for patients to receive the profitable therapy and a convenient easy to use dry powder inhaler.
Despite some minor setbacks along the way last year, we have shown perseverance.
We were not deterred when the restrictions imposed by other companies limited access to the cartridges needed by patients using the academies III pump instead.
Working with our manufacturing partner and through our litigation against the midst medical in the United Therapeutics.
We launched the RG 3 ml medication cartridge earlier this year.
We went above and beyond and solve the device problem in order to allow greater patient access to the <unk> injection medication.
It is important to remember that arch profitable injection is AP rated and therapeutically equivalent to a modular with the same active and inactive ingredients same dosage strength same dosage forms the same smiths medical pumps with the same services and support for patients and health care providers.
At a lower cost.
It's also worth noting that we are partners with Sandoz Novartis.
1 of the largest pharma companies in the world and all of the resources and expertise that they have to bear.
Even though our product is the generic we treat the commercialization efforts more like a brand we have of national field sales force of experienced PIH sales reps that are calling on prescribers.
And we recently hired a VP of market access to work with payers to complement sandoz efforts.
We have confirmed that the available supply of pumps is more than adequate to serve the subcutaneous patient population.
So it's a bit early to assess the full impact of our launch we are highly encouraged and I look forward to updating you during our next earnings call on the response to this new choice.
Concurrent with the launch of the subcutaneous cartridge our in house team promptly resubmitted the NDA for <unk> 1 ahead of schedule.
The FDA has since confirmed that the Resubmission was complete and considered a class II response setting a <unk> date of November 7.2021.
We feel confident that the data submitted clarifies and directly addresses the CMC related items identified by the agency last year.
We also feel well prepared to support the Fda's preapproval inspections with 1 currently ongoing at our North Carolina facility.
Needless to say, it's an exciting time in the Companys evolution and we look forward to a positive outcome on the agency with the goal of receiving tenant of approval in the fall.
As we work to support the Fda's ability to grant tentative approval, our ultimate success will be tied to the resolution of hatch Waxman litigation brought by United Therapeutics.
While we cannot disclose the details of our legal strategies and arguments. We can remind you that the FDA 30 months regulatory state, which expires on October 2022 is directly tied the patents covering a process of making profitable of compound that has been manufactured at commercial scale for decades.
We will provide updates on the future as the.
They are deemed material, but for the time being we remain confident in our arguments of non infringement and invalidity debt that we of pursuit in the hatch Waxman litigation and the corresponding IPR proceedings with the United States patent and trademark office.
Lastly, with the long term path in mind, we took the additional steps in the second quarter to ensure financial stable financial footing.
Maintained the sense of discipline in each financial decision and we build the prioritize operating plan to provide the capital needed to achieve our near term goals of launching 861.
We have taken the steps with the firm belief that liquidity products are the best interest of the patient community, who are who we are committed to support.
At this time I will turn the call over to Mike to review, our second quarter financial summaries.
Thank you Damian and good morning, everyone.
Our second quarter of 2021 financial results can be found on the press release issued earlier today and our form.
The 10-Q filed with the SEC, both of which will be available on our website.
To briefly summarize we recognize revenue of $3.1 million for the second quarter of 2021 related to our promotion agreement with Sandoz in support of <unk> injection the relate.
The cost of revenue during this quarter was zero point $7 million.
This compares to no revenue and no cost in the second quarter of 2020 since the acquisition of <unk> was not completed until November 2020.
Research and development expenses were $4.6 million for the second quarter compared with $8.5 million for the second quarter of 2020, a decrease of $3.9 million or roughly 46%.
This decrease primarily related to lower expenses from our 861 clinical program and lower employee and consulting expenses.
We continue to improve on general and administrative expenses recording $4.4 million for the second quarter of 2021 down from $5.2 million for the same quarter in the prior year. The decrease of <unk> $8 million of roughly 15% was primarily due to lower professional fees associated with corporate activities and lower <unk>.
<unk> and personnel expenses as a result of decrease in head count year over year.
These decreases were partially offset by an increase in legal fees related to our ongoing 86, 1 related litigation.
The net loss for the quarter was $6.5 million or <unk> 13 per basic and diluted share compared to the net loss of $13.9 million or <unk> 49 per basic and diluted share for the second quarter of 2020.
We ended the second quarter with cash of $67.9 million compared.
Compared to $65.3 million at the end of <unk> at the end of the year of 2020. The increase in cash was the result of the refinance debt of small equity raise of $21.7 million in April and focused spending in the quarter.
With the strong balance sheet, we are well positioned to deliver on potential value, creating events beyond regulatory approval and litigation.
I'd now like to turn the call back over to Damien.
Thanks, Mike.
Just as a summary of our near term corporate goals are clear.
1 is to optimize the profitable injection sales.
2 is to achieve tentative approval for a 6.1.
The 3 is the successfully resolved the hatch Waxman litigation and launch a 6.1 in 2022.
At this time I would like to ask the operator to facilitate any questions that you may have.
If you would like to ask an audio question. Please press star 1 on your telephone keypad.
The star 1 to asking audio question.
Your first question comes from the line of conveys the with Jefferies.
Good morning, Damien team.
On.
What's your split this quarter between IV and subcutaneous.
The generic off net sales.
Could you the 3 part of the sorry can you. Please provide us any additional details on the claims construction.
And then on my third and final question you mentioned last call of that 861 may be able to be approved in.
ILD without any additional studies.
Can you describe to us what regulatory steps are needed to achieve that and.
If there is any kind of data exclusivity.
There okay. Thank you.
Thanks Tobey.
I'll try to parse these out.
I don't know if rusty if youre available to talk about the claim construction on the second 1.
In regards to the IV versus sub Q sales split we arent disclosing that at this time I do want to say, though that the launch has gone really well the uptake in patient conversions of new starts into the generic <unk> injection is going really well.
We basically launched in June of the quarter. So we only had 1 month of the of the uptick but.
There is both lift in sub Q and in the IV side of the market as we expect it to be we're also seeing really good payer engagement and payer interest in moving the utilization of generic.
2 of much higher level. So all of those are positive and we will be able to give you more insights after after next quarter.
Russ are you on to talk about the claims construction.
Thanks Damian.
With respect of the claim construction hearing there were 5 <unk>.
Terms that were.
On that issue and the hearing the judge has ruled on 3 of those terms with 2 terms still under consideration by the court.
Of the 3 terms that were construed to terms sort of given their plain and ordinary meaning and and 1 term debt.
Ruled in our favor as to the construction of that term. Thank you.
Thanks Rusty.
And Combi for the last question in relation to the ILD indication.
It is our intention to go after that indication.
The United Therapeutics in the til based on <unk> product was granted the 3 years data exclusivity.
That goes until March of 2024, and so we'll be obviously looking to try to add that indication once that exclusivity has expired.
Great. Thanks, Damian and I really appreciate the answers.
Sure.
If you would like to ask a question. Please press star 1 on your telephone Keypad. Your next question comes from the line of Serge Belanger with Needham.
Hey, good morning, Thanks for taking my questions.
I have.
A couple on the generic modular products.
You mentioned, the sub Q product kind of double of the market opportunity.
Can you talk about the.
Ongoing work with payers and weather pace all patients currently have access to to the sub 2 product or.
It will come with additional contracting.
Yes. They are so so right now there is an opportunity for all patients to be able to use the generics of <unk>. Both on the IV side on the sub Q side.
There's a lot of payer interest and frankly some.
The payer mandates that are that are have been instituted by the payers.
But there is no required additional contracting in order for patients to be able to use the generic if thats. What your question was.
Yes.
And I think in the past you've talked about the.
Profit split with Sandoz kind of.
On moving around moving downwards as you reach a certain sales threshold.
Have you reached that threshold or when do you expect to reach it.
Yes, we havent met yet, but we anticipate that it will be either in end of Q3 of our Q it'll or at the beginning of Q4 that we will likely trigger that that change.
Got it alright, thank you.
Yep.
At this time there are no further questions I would now like to turn the floor back to management for any additional or closing remarks.
Thank you we appreciate everyone listening to our Q2 call.
We are in execution mode, and I think we're doing a good job of blocking and tackling and doing what we need to do to continue to advance the company and the programs that we have so thank everyone for their time and be well.
Thank you for participating on today's conference call. You May now disconnect your lines at this time.
Okay.
[music].
Okay.
[music].
[music].
[music].
[music].
Good morning, and welcome everyone to the liquidity of corporations second quarter 2021 financial results.
Corporate update conference call. My name is Angie 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 and instructions will be provided at that time for you to queue up for questions. If anyone have any difficulty hearing the conference. Please press star zero for operator at the towards the issue of anytime.
<unk>.
I would like to remind everyone that todays conference call is being recorded I would now like to hand, the conference over to Jason Adair, Vice President corporate development and strategy. Please go ahead Sir.
Thank you Angie it's my pleasure to welcome everyone to today's conference call to discuss our second quarter financial results for 2021 to provide a business update.
Before we begin 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 each day this expectation.
For further information on the company's risk factors. Please see the liquidity of filings with the Securities and Exchange Commission at Www Dot FCC dot Gov or on liquidity as website, that's the equity of Dot 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.
I'm joined today by Mike Instead of our Chief Financial Officer, and several members of our management team who may help address questions later on the call.
My comments today will be brief and consistent with the release issued earlier today.
What I can confidently say is that in the 7 months since I assumed this role of CEO. We have delivered on every objective we set forth we.
We immediately addressed and increase the financial stability of the company focusing it on value creating activity.
We increased the value of our cross sell of injection product by securing the FDA clearance and launch of the RG 3 ml medication cartridge that enables the delivery of <unk>.
Total injection by subcutaneous route of administration and more than doubles, the addressable market for that product.
We promptly resubmitted the NDA for <unk> <unk> 6.1.
Now of the Paducah day action in November.
And we continue to engage in multiple work streams to defend our legal right to provide choice and options for patients to receive <unk> therapy, and a convenient easy to use dry powder inhaler.
Despite some minor setbacks along the way last year, we have shown perseverance.
We were not deterred when restrictions imposed by other companies limited access to the cartridges needed by patients using the cat M 3 pump instead.
Working with our manufacturing partner and through our litigation against Smiths medical in the United Therapeutics.
We launched the <unk> 3 of them no medication cartridge earlier this year.
We went above and beyond installed the device problem in order to allow greater patient access to the tropical injection medication.
It's important to remember that arch profitable injection is AP rated and therapeutically equivalent to a modular with the same active and inactive ingredients same dosage strength same dosage forms the same smiths medical pumps with the same services and support for patients and health care providers.
At a lower cost.
It's also worth noting that we are partners with Sandoz Novartis.
1 of the largest pharma companies in the world and all of the resources and expertise that they have the bear.
Even though our product is the generic we treat the commercialization efforts more like a brand we have of national field sales force of experienced P. A H sales reps that are calling on prescribers.
And we've recently hired a VP of market access to work with payers to complement the sandoz efforts.
Okay.
We have confirmed that the available supply of pumps is more than adequate to serve the subcutaneous patient population.
So it's a bit early to assess the full impact of our launch we are highly encouraged and I look forward to updating you during our next earnings call on the response to this new choice.
Concurrent with the launch of the subcutaneous cartridge our in house team properly resubmitted the NDA for <unk>, 1 ahead of schedule.
The FDA has since confirmed that the Resubmission was complete and considered a class II response setting a <unk> date of November 7.2021.
We feel confident that the data submitted clarifies and directly addresses the CMC related items identified by the agency last year.
We also feel well prepared to support the Fda's preapproval inspections with 1 currently ongoing at our North Carolina facility.
Needless to say, it's an exciting time in the Companys evolution and we look forward to a positive outcome on the agency with the goal of receiving tenant of approval in the fall.
As we work to support the Fda's ability to grant tentative approval of our ultimate debt success will be tied to the resolution of hatch Waxman litigation brought by United Therapeutics.
While we cannot disclose the details of our legal strategies and arguments. We can remind you that the FDA 30 months regulatory day, which expires on October 2022 is directly tied to patents covering a process of making profitable. The compound has been manufactured at commercial scale for decades.
We will provide updates on the future as the.
They are deemed material, but for the time being we remain confident in our arguments of non infringement and invalidity debt that we have pursued in the hatch Waxman litigation and the corresponding IPR proceedings with the United States patent and trademark office.
Lastly, with the long term path in mind, we took the additional depth in the second quarter to ensure financial stable financial footing.
<unk> maintained the sense of discipline in each financial decision and we build the prioritize operating plan to provide the capital needed to achieve our near term goals of launching a 6.1.
We have taken the steps with the firm belief that liquidity products are the best interest of the patient community, who are who we are committed to support.
At this time I will turn the call over to Mike to review, our second quarter financial summaries.
Thank you Damian and good morning, everyone.
Our second quarter of 2021 financial results can be found in the press release issued earlier today and our form.
10-Q filed with the SEC, both of which will be available on our website.
Briefly summarize we recognize revenue of $3.1 million for the second quarter of 2021 related to our promotion agreement with Sandoz in support of <unk> injection.
The related cost of revenue during this quarter was zero point $7 million.
This compares to no revenue and no cost in the second quarter of 2020 since the acquisition of <unk> was not completed until November 2020.
The research and development expenses were $4.6 million for the second quarter compared with $8.5 million for the second quarter of 2020, a decrease of $3.9 million or roughly 46%. This decrease primarily related to lower expenses from our 861 clinical program and lower employee and consulting expenses.
We continue to improve on the general administrative expenses recording $4.4 million for the second quarter of 2021 down from $5.2 million for the same quarter in the prior year. The decrease of <unk> $8 million of roughly 15% was primarily due to lower professional fees associated with corporate activities and lower <unk>.
<unk> and personnel expenses as a result of decrease in head count year over year the.
The decreases were partially offset by an increase in legal fees related to our ongoing 861 related litigation.
The net loss for the quarter was $6.5 million or <unk> 13 per basic and diluted share compared to the net loss of $13.9 million or <unk> 49 per basic and diluted share for the second quarter of 2020.
We ended the second quarter with cash of $67.9 million compared.
Compared to $65.3 million at the end of <unk> at the end of the year of 2020. The increase in cash was the result of the refinance debt the small equity raise of of $21.7 million in April and focused spending in the quarter.
With the strong balance sheet, we are well positioned to deliver on potential value, creating events beyond regulatory approval and litigation.
I'd now like to turn the call back over to Damien.
Thanks, Mike.
This is a summary of our near term corporate goals are clear.
1 is to optimize the cross sell of injection sales.
2 is to achieve tentative approval for a 6.1.
The 3 is the successfully resolve the hatch Waxman litigation and launch a 6.1 in 2022.
At this time I would like to ask the our operator, we'll take any questions that you may have.
If you would like to asking audio question. Please press star 1 on your telephone keypad.
The star 1 to ask an audio question.
Your first question comes from the line of conveys the with Jefferies.
Good morning, Damian <unk>.
What's your split this quarter between IV and subcutaneous.
The generic off net sales.
Could you is there is a 3 part of the sorry can you. Please provide us any additional details on the claims construction.
And then on my third and final question, you mentioned last call of that apex, 1 may be able to be approved in.
ILD without any additional studies.
Can you describe to us what regulatory steps are needed to achieve that and.
If there is any kind of data exclusivity.
There okay. Thank you.
They've combi.
I'll try to parse these out.
I don't know if rusty if youre available to talk about the claims construction on the second 1.
In regards to the IV versus sub Q sales split we arent disclosing that at this time I do want to say, though that the launch has gone really well the uptake in patient conversions of new starts into the generic <unk> injection is going really well.
We basically launched in June of <unk> of the quarter. So we only had 1 month of the of the uptick but.
There is both lyft and sub Q and in the IV side of the market as we expect it to be we're also seeing really good payer engagement and payer interest in moving the utilization of generic.
2 of much higher level. So all of those are positive and we'll be able to give you more insights after after next quarter.
Russ are you on to talk about the claims construction.
Thanks Damian.
With respect of the claim construction hearing there were 5 terms that were.
At issue in the hearing the judge has ruled on 3 of those terms with 2 terms still under consideration by the court of.
Of the 3 terms debt, where construed to terms from a given their plain and ordinary meaning and and 1 term.
Of the judge ruled in our favor as to the construction of that term.
Yes.
Thanks Rusty.
Combi for the last question in relation to the ILD indication.
It's our intention to go after that indication.
United Therapeutics in the 2 based on Nebulize product was granted the 3 years data exclusivity debt.
Goes until March of 2024, and so we'll be obviously looking to try to add that indication once that exclusivity has expired.
Great Thanksgiving really appreciate the answers share.
Sure.
If you would like to ask a question. Please press star 1 on your telephone Keypad. Your next question comes from the line of Serge Belanger with Needham.
Hey, good morning, Thanks for taking my questions.
I have a.
Couple of on the generic modular products.
You mentioned the.
A few product kind of double of the market opportunity can.
Can you talk about the.
Ongoing work with payers and weather pace all patients currently have access to the substitute product or.
It will come with additional contracting.
Yes. They are so so right now there is an opportunity for all patients to be able to use the generics of <unk> built on the IV side and the sub Q side.
There's a lot of payer interest and frankly some.
The payer mandates that are that are have been instituted by the payers.
But there is no required additional contracting in order for patients to be able to use the generic.
That's why your question was.
Yes.
And I think of in the past you've talked about the.
Profit split with Sandoz kind of.
Moving around moving downwards as you reach a certain sales threshold.
Have you reached that threshold or when do you expect to reach it.
Yes, we haven't made it yet, but we anticipate that it will be either in the end of Q3 of our middle or the beginning of Q4 that we will likely trigger that that change.
Got it alright, thank you.
Yep.
At this time there are no further questions I would now like to turn the floor back to management for any additional or closing remarks.
Thank you we appreciate everyone listening to our Q2 call.
We are in execution mode, and I think we're doing a good job of blocking and tackling and doing what we need to do to continue to advance the company and the programs that we have so thank everyone for their time and be well.
Thank you for participating on today's conference call. You May now disconnect your lines at this time.