Q2 2021 Liquidia Corp Earnings Call
[music].
Good morning, and welcome everyone to the liquidity of corporations second quarter 2021 financial results and corporate update conference call. My name is Angie and I will be your conference operator today currently.
Currently all participants are in listen only mode.
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 has any difficulty hearing the conference. Please press star zero for an operator to assist you 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 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 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 as filings with the Securities and Exchange Commission at Www Dot FCC dot Gov or on liquidity as web site at <unk> 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.
Im joined today by might consider our chief financial Officer, and several members of our management team who may help address questions later in 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 as 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 <unk> injection product by securing the FDA clearance and launch of the RG 3 ml medication cartridge that enable us to deliver profitable injection by subcutaneous route of administration and more than doubles, the addressable market for that product.
We promptly resubmitted the NDA for <unk> 861 net.
Now with 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 to 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 restrictions imposed by other companies limited access to the cartridges needed by patients using the cat M is 3 pump instead.
Working with our manufacturing partner and through our litigation against Smiths medical in United Therapeutics.
We launched the <unk> <unk> mill 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'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 the resources and expertise that they have to bear.
Even though our product as a generic we treat the commercialization efforts more like a brand we are a national field sales force of experienced PIH sales reps that are calling on prescribers.
And we've 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 861 ahead of schedule.
The FDA has since confirmed that the Resubmission was complete and considered a class II response setting a purdue for goal 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 with the agency with the goal of receiving tentative 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 in October 2022.
Is directly tied to patents covering a process of making profitable a.
The compound has been manufactured at commercial scale for decades.
We will provide updates in the future as they as 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 a corresponding IPR proceedings with the United States patent and trademark office.
Lastly, with a long term path in mind, we took additional steps in the second quarter to ensure financial stable financial footing.
We maintained the sense of discipline in each financial decision and we built a prioritize operating plan to provide the capital needed to achieve our near term goals of launching a 6.1.
We have taken these 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 2021 financial results can be found in the press release issued earlier today and our form.
<unk> 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 and supportive to bras no injection.
For 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.
Research and development expenses were $4.6 million for the second quarter compared with $8.5 million for the second quarter 2020, a decrease of $3.9 million or roughly 46%.
This decrease primarily related to lower expenses from our <unk> clinical program and lower employee and consulting expenses.
We continue to improve on general and administrative expenses recording for $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 or 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 key 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 a 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 to $65.3 million at the end of <unk> at the end of the year 2020. The increase in cash was a result of the refinance debt a small equity raise of $21.7 million in April and focused spending in the quarter.
With a 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.
So just as a summary of our near term corporate goals are clear 1 is to optimize coprostanol injection sales.
2 is to achieve tentative approval for a 6.1.
And 3 is to successfully resolve the hatch Waxman litigation and launch a 6.1 in 2022.
At this time I would like to ask our 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 again, Thats star 1 to ask an audio question.
Your first question comes from the line of <unk> <unk> with Jefferies.
Good morning, Damian <unk>.
What's your split this quarter between IV and subcutaneous.
Generic off net sales.
Could you is it a 3 parter sorry can you. Please provide us any additional details on the claims construction.
And then my third and final question, you mentioned last call that <unk> 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.
Combi.
I'll try to parse these out.
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 and new starts into the generic to <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's.
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 to utilization of generic.
For a much higher level. So all of those are positive and we will be able to give you more insights after after next quarter.
<unk> are you on to talk about the claims construction.
Thanks Damian.
With respect for the claim construction hearing.
Hi.
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 the 3 terms that were construed to terms for given their plain and ordinary meaning and and 1 term.
The judge ruled in our favor as to the construction of that term.
For you.
Thanks Rusty.
Combi for the last question in relation to the ILD indication.
It's our intention to go after that indication.
United Therapeutics, and the <unk> product was granted 3 years data exclusivity.
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 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.
A couple on the generic modular products.
You mentioned the.
<unk> product kind of doubles the market opportunity can.
Can you talk about.
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 generic <unk> both on the IV side and the sub Q side.
There's a lot of payer interest and frankly some.
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 what your question was.
Okay.
And I think in the past you've talked about the profit split with Sandoz.
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 endo for Q3, or Q middle or the beginning of Q4 that we will likely trigger that that change.
Got it alright, thank you.
Yes.
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 in 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 for 5 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 assistance to us issue at any time.
<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 for today's conference call to discuss our second quarter financial results for 2021 and 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 liquidity as filings with the Securities and Exchange Commission at Www Dot FCC dot Gov or on liquidity as website <unk> 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 in 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 as 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 tropical injection product by securing the FDA clearance and launch of the RG 3 ml medication cartridge that enables the dealer <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 with 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.
Ted.
With our manufacturing partner and through our litigation against Smiths medical in the United Therapeutics.
We launched the <unk> 3 I'm no medication cartridge earlier this year we.
We went above and beyond and solve the device problem in order to allow greater patient access to the profitable injection medication.
It's important to remember that arch <unk> 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 the resources and expertise that they have to bear.
Even though our product as a generic we treat the commercialization efforts more like a brand we are a 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 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 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 with the agency with the goal of receiving tentative 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 in October 2022.
It's directly tied to patents covering a process of making profitable our compound has been manufactured at commercial scale for decades.
We will provide updates in the future as they as 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 a corresponding IPR proceedings with the United States patent and trademark office.
Lastly, with a long term path in mind, we took additional steps in the second quarter to ensure financial stable financial footing.
Maintain a sense of discipline in each financial decision and we build a 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 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.
For 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.
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 for $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 or roughly 15% was primarily due to lower professional fees associated with corporate activities and lower <unk>.
Folding in 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 861 related litigation.
The net loss for the quarter was $6.5 million or <unk> 13 per basic and diluted share compared to a 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 to $65.3 million at the end of <unk> at the end of the year 2020. The increase in cash was a result of the refinance debt a small equity raise of $21.7 million in April and focused spending in the quarter.
With a strong balance sheet, we are well positioned to deliver on potential value, creating events beyond regulatory approval and litigation.
Now I'd like to turn the call back over to Damien.
Thanks, Mike.
So just as a summary of our near term corporate goals are clear 1 is to optimize for profitable injection sales.
2 is to achieve tentative approval for a 6.1.
And 3 is to successfully resolve the hatch Waxman litigation and launched a 6.1 in 2022.
At this time I would like to ask our operator facilitate any questions that you may have.
If you would like to asking audio question. Please press star 1 on your telephone keypad again, Thats star 1 to ask an audio question.
Your first question comes from the line of conveys Yahtzee with Jefferies.
Good morning, Damian <unk>.
What's your split this quarter between IV and subcutaneous.
Generic off net sales.
Could you is it a 3 parter to sorry can you. Please provide us any additional details on the claims construction.
And then in my prepared remarks.
My question is you mentioned last call that 861 may be able to be approved in.
ILD without any additional studies.
Can you describe for 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 and.
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 and 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's 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 to utilization of generic.
To a much higher level. So all those are positive and we will be able to give you more insights after after next quarter.
<unk> are you on to talk about the claims construction.
Thanks Damian.
With respect to the claim construction hearing there were 5 <unk>.
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 the 3 terms that were construed to terms for given their plain and ordinary meaning and and 1 term.
Growth 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.
United Therapeutics in the tomato Nebulize product was granted 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, Damien 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 subsea product kind of double the market opportunity.
Can you talk about.
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's an opportunity for all patients to be able to use the generic <unk> built on the IV side and the sub Q side.
There's a lot of payer interest and frankly some.
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 what your question was.
Yes.
And I think in the past you've talked about the profit split with Sandoz.
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 or 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 in today's conference call. You May now disconnect your lines at this time.