Q4 2021 Liquidia Corp Earnings Call
Good morning, and welcome everyone to the liquidity a corporation full year 2021 financial results and corporate update conference call. My name is Josh 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.
If anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time I would like to remind everyone that this conference call is being recorded I will now hand, the call over to Jason Adair.
Your vice President corporate development and strategy.
Thank you Josh it's my pleasure to welcome everyone to today's call to discuss our full year results for 2021 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 these stated expectations.
For further information on the company's risk factors. Please see liquidity as filings with the Securities and Exchange Commission at Www Dot Dot Gov or on liquidity as web site at <unk> Dot com.
Joining the call today are Chief Executive Officer, Roger Jeffs, Chief Financial Officer, Mike could setup senior.
Senior Vice President and General Counsel, Rusty Schindler and other members of liquidity management.
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 Andrew.
Thank you, Jason and good morning, everyone. It's a pleasure to be sticking with you today.
2021 was a banner year for liquidity.
Optimizing the company's corn as she gets.
We begin to focus our full efforts towards launch of your trip yet at the end of this year.
2021 included multiple major accomplishments somehow.
Some highlights are firstly.
In November we received tentative approval, if you trip yet with Lakeland.
We view the labeling is highly favorable as it includes description debuts in both patient switching from Taipei sale as well as prostacyclin naive patients with no new safety issues identified.
We are excited to bring this portable titratable durable therapy to patients.
All of whom have been using your trip you up for more than three years.
It does it is approximately three times that.
There's a therapeutic dose.
This therapeutic profile represents a potential game changer.
And positions you trap you become the process like our first choice.
Secondly.
In April we expanded the use of Trapasso injection into the second thing is market.
As a result, we more than doubled the number of patient contrapposto injection.
Approximately 500 patients out there.
Specialty pharmacy is important.
Approximately 400 unique prescribers have switched patients from brand to generic.
Approximately 150 unique prescribers.
Set to launch in April of 'twenty one.
We expect to see continued demand growth new generic generic mandates from payers are increasingly be an issue from large payers to cover tens of thousands of lives.
Thirdly, we also have significantly advanced our ongoing litigation with the United Therapeutics, including a final written decision on the IPR with 91 patent that sound seven benign claims unpractical. In addition, United Therapeutics stipulation of liquidity as non infringement of the remaining two claims.
Pat.
Patent will no longer be part of the hatch Waxman trial, which is scheduled.
The end of this month.
An IPR with loss of instituted for the 793 patents with T test, stating that liquidity have demonstrated a reasonable likelihood of prevailing in that all of the claims with a 793 patents on patentable obvious over the combination of certain ironic.
And while that's Friday summary judgment decision did not go as we hope.
It is important to note that the issue before the court and semi.
Was not the same issues that will be before the court of trucks.
Central specifically noted that she was not commenting the validity of the asserted claims into 901 and that was six six patents or the likelihood that the Delaware court behind the claims invalid based on the same rate, but reasoning that led to <unk> previously to invalidate United Therapeutics 393 patent.
Given that jets hauls recommendation recommendation was based solely on technicalities that applied only to our collateral and stopped stoffel arguments.
And not on the substance of arguments regarding the scope of the six and nine one patents. We are we are if anything more confident than before and our positions of invalidity and non infringement that will be presented at trial.
And finally, we strengthened our balance sheet through business optimization initiatives and to prevent financing of our credit facility, but that's the SBB providing funding through key legal milestones in the early launch stage, if you'd trip yet as Micah said I will now describe in more detail for you Mike are pretty good.
Thank you Roger and good morning, everyone. Our full year 2021 financial results can be found in the press release issued earlier today and on our form K Form 10-K to be filed with the SEC after market close today in those documents, you'll see that first revenue was $12 $9 million for the full year of 2021 compared.
With $700000 for the full year of 2020, the increase is driven by recording a full year revenue related to the promotion of <unk> injection. Following the acquisition of <unk> in November 2020.
Revenue recognized under the promotion agreement in 2021 isn't that a $2 7 million of amortization of the contract acquisition costs associated with the promotion agreement.
Cost of revenue was $3 million for the full year 2021 compared with $200000.
Prior year 2021, and included a full year sales force related to Salesforce related costs as well as amortization of the intangible asset associated with the promotion agreement.
Research and development costs decreased in 2021% to $25 million for the full year compared with $32 $2 million the prior year.
The 36% decrease primarily related to lower expenses from our <unk> clinical program, which was substantially completed prior to filing the NDA in 2020, and lower employee and consulting expenses.
General and administrative expenses were $23 $1 million for the full year 2021, compared to 27 4 million for the prior year.
The decrease of $4 3 million or approximately 60% was due to $9 $1 million decrease in consulting personnel and commercial expenses and offset by a $5 $1 million increase in legal fees relating to our ongoing <unk> related litigation and a $2 million increase in stock based compensation upon tentative approval of your trap you last November .
In summary, we've incurred a net loss of $34 $6 million.
Or <unk> 70 per basic and diluted share compared to a net loss of $59 $8 million or $1 76 for the cents per basic and diluted share for the year ended December 31 2020.
Turning to our balance sheet, we ended the year in a strong position.
We ended 2021 with $57 $5 million of cash on hand.
In early 2022, we also increased our debt facility with Silicon Valley Bank to provide immediate access to an additional $15 million of cash in 2022 with additional capital available pending certain milestones.
When combined with the continued revenue from the <unk> injection the company will be well positioned to once you trip yet pending its final FDA approval with that I'd now like to turn the call back over to Roger.
Thank you Mike moving forward, we are extremely excited about the growth prospects for the company.
As Jason mentioned, Mike and I'm joined by other key members of our leadership team and we will now open it up for questions. Operator first question. Please.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw.
Driving questions asked apology.
Our first question comes from Kevin be geography with Jeffrey.
Jefferies. You May proceed with your question.
Good morning, everyone, Hey, Roger and team are comedies on for Chris here three questions for me.
First of all why do you think your trip you can expand inhaled ph market $2 billion from where it currently stands today.
Second question, how have pairs responded to the availability of generic sub Q2 call.
Yeah.
And then thirdly was there any United strategy revealed during these.
During the summary judgment proceedings.
Thank you for the questions I'll answer the first one about the market opportunity.
And while we think that's a growing opportunity.
And then.
I'll have Mike answer the generic question unless you cannot find on legal strategy at least what he's able to do so.
So in terms of the market opportunity for your trip you Theres multiple near term value accelerators, and they're really driven by four key link person.
Bruce portability when Libre Tolerability.
The other lever is tight credibility and final lever is Garrett.
Got it.
So let me speak to that a little bit. So if you look at just the who group one P H market.
It's estimated to be around $500 million market just about an estimate.
We think the value of a dry powder formulation might contribute.
Portability to content.
Greatly transmission that market and rapidly from Nebulize formulations to dry powder formulations, and I think that's quite simply done because you're taking a nine to 12 breaths per session four times a day with two breaths per section with assault. Besides debate device with blister pack capsules, where it doesn't make sense.
Wiley portable small tried and true devices that we use for example had been used in asthma and COPD COPD brand drugs for years. Thereafter. These devices are also active in trials N P. H gasparini or they are two examples of companies using the same device.
And theirs.
There are $6 million to $7 million after the seats device or more and obviously, we only need a small number of those.
Supporting portability will change the paradigm.
More importantly, though its not simply portability I think we've also had changed the therapeutic profile of inhaled your pass now using uniquely our print formulation.
<unk> now so as you know print print provides uniform size and shape.
Mono dispersed particles in the one three micron range.
That does is allow for better ore down dynamic performance.
Particles fly cause a lower loan loss deposition in the upper airway. So what we think what we what we have seen is that there is potential for lower.
Adverse events related to deposition in a threat, so let's start irritation and pain, let's call.
This is borne out to be true in our early studies and when we looked at the dosing. So we have had patients now in open long term extension studies for up to three years, we have patients who are in excess of three times therapeutic dose.
So you were talking about what would be the equivalent of 27 breaths four times, a day, which were delivering two to four breaths per section so massively different there and really starting to change the profile said that inhaled through cross now is now behaving more.
And its capabilities like oral or parenteral cross now that can be done to effect.
But that will then lead to a better.
Durability, so physicians will be able to hold their patients longer unhealthy across them.
So I think youre going to see expansion of the market two legs one is durability.
The delay the time to lock more onerous their therapies, including oral and Perenco, which both have tolerability issues and its going to expand into earlier use them as well as probably cringe a greatly on the oral use as.
Prostacyclin My first choice there aren't really aren't campaign has driven to drive he trap yet to be the prostacyclin of first choice and we can we think we can take 500 million Mark dollar market today and greatly expanded again based on these pharmacologic attributes that I've just described.
So.
Mike If you could talk about the generic com.
Yeah.
Yes, absolutely, thanks, Rajiv and thanks Bobby.
For Us <unk> approval was critical from a payer perspective, it took off the administrative burden of payers, where before they had to differentiate before injectable and sub Q.
As Roger said, we have approximately 500 patients on therapy, which is more than double than what we had in April 2021, which was the first month.
Last month for sub Q approval.
In addition camera players payers have already mandated.
Generic scale and that is contribute to that.
Ah patients.
And just you know looking forward for 2022, we're not going to we're not going to give revenue guidance, but.
Just give me an idea two large national payers covering approximately 50 million lives will require the use of generic postal injection and we expect to see an.
Uptake coming.
As we move into Q2 and beyond 2022.
Great. Thank you Mike.
What you can't if you could speak to what we learned about legal strategy.
Sure. Thanks, Thanks, Roger and thanks for the question so.
To answer your question.
Some regions based on collateral Stopple, which is really its own sort of separate discrete issue.
It's differentiated.
The general non infringement and invalidity arguments that'll be be made of trials. So it's hard to read too much into that as he E T strategy.
I think what is notable is the core arguments we made in support of summary judgment.
Address the scope of United Therapeutics is six six to 91 patents and a comparison of the product's claimed by the six 691 patents.
It claimed by United Therapeutics, and their 393 patent that was previously and validated.
Deem to be on patents all over the prior art.
We think it's notable that in issuing a recommendation the judge didn't reject or disagree with.
With our arguments on those.
So that's certainly not determinant of how what the outcome will be a trial, but but we think that is notable so.
I think that's that's informative for us as we move forward to trial, but again because the issue is discrete from the issues that will be presented at trial, it's hard to read too much into into what <unk> strategy will be.
Alright. Thank you so much for your answers.
Alright. Thank you Ben next question please.
Thank you. Our next question comes from Serge Belanger with Needham <unk> Company. You May proceed with your question.
Hi, good morning, coupled.
Couple of questions for me I guess, the first one for Roger.
Outlines some of the key decisions on the.
Patent trial front as well as the IPR process that we should expect and how these will guide or determine your.
Prelaunch commercial activities for Ya trivia.
And then second question I guess for Mike can you just talk about the cash runway and the potential ramp up in Opex for for 2022.
And it looks like SG&A went up pretty significantly in the fourth quarter.
Were those mostly just onetime items or legal stuff I'm, just trying to get some clarification. Thanks.
Yeah. Thanks for the questions. So just just in terms of.
The legal case will drive our prelaunch preparation.
I'll just start by saying, obviously, we're taking all legal measures we can to ensure that we can remove any of them aren't warranted.
Barriers and.
And as soon as we're free and clear to the market, we will pull forward or our marketing.
And launch so we're preparing now to launch.
Rescue maybe you could talk about it.
He's our general counsel, if you could talk about key decisions. The IPR process that will happen over the course of this year.
Yes, and just to give a preview of some key dates.
Obviously the trial at the end of this month. So it's scheduled for the 28, 30th in District Court in Wilmington, Delaware.
Arguments will be on March 31.
We're expecting a hearing.
703, IPR sometime in mid May.
We should then get a final written decision from the IPR in the east.
703, IPR sometime mid August .
And then as far as the decision from the hatch Waxman trial.
We are anticipating that will likely receive a decision prior to the end of the 30 months stay but beyond that it's hard to give much guidance because.
We know the courts are.
Our busy.
And really it will be on the judges hands as to how how quickly the decision comes out.
Great. Thank you best thing so Mike maybe you can answer the question around cash.
Yes, absolutely. Thanks for the question Serge So from a cash perspective, we feel really good with where we are from a cash position we are.
As Roger said.
We are.
With the expansion of the SBB facility, which gives us access immediate access to $15 million of additional capital along with additional tranches upon certain milestones.
We feel really good with where we are we are.
Moving forward with pre commercialization activities.
We're playing to win here, we are in the process of ramping up and we feel very comfortable with our capital position that it can get us through the launch of <unk> in Q4 of 2022 and really into Q1 of 2023.
<unk>.
Related to your question on Q4 is really driven by a couple of factors one.
SG&A did increase in Q4, there were some one time costs related to stock compensation.
Four.
US getting tentative approval, we did have increase in legal costs as we ramp up for as we ramp up and get ready for the trial.
Here in the next couple of weeks. So that those are really the explanations of why SG&A were increase then.
Most of the increase was a one time costs related to stock compensation.
Great. Thank you. Thanks.
Thank you Serge.
Operator next question please.
Thank you. Our next question comes from Andreas our garage Liz.
<unk> you May proceed with your question.
Oh, yeah. Good morning, Thanks for taking my questions a couple of Oh I'm not sure.
Can you can you let's start with can you provide some details some more details around the launch preparations are how many reps do you plan to her and at what point in time would that happen.
Also if the litigation is resolved by the expiry of the 30 month stay are you planning to launch at risk and then just kind of thinking about the print technology more broadly how are you thinking about expanding the pipeline going forward and the timing around that thanks.
Thanks, Thanks for the questions. So okay.
Let me take them in reverse order and I'll I'll answer the question about print.
Have.
Mike answer about launch prep and invest and can talk about litigation.
And at risk. Thanks, So with print obviously now with.
The trip yet having tentative approval was that one that it's a platform.
I'm very proud of the GMP manufacturing facility for the API that we have in house in Morrisville, North Carolina RTP.
We are looking to expand opportunities.
In particular, we're trying to leverage the expertise that we're building for the launch of your trip Yeah. So we're looking at next generation longer acting forms of few trachea.
Early we won't really talk about those until we have data that we feel would be of interest to you that we have to get that through the first half of this year potentially.
Excited about what we're doing there and then also having broader business discussions about what other things we could.
With print available self to whether it's a market opportunity niche orphan areas that where we could penetrate potentially complementary.
What we're doing already in pulmonary hypertension. So that's broadly kind of the way we're looking at things I think there's enough on our plate and enough growth and success opportunity ahead, if we successfully launch your trip yeah.
If we then prepare ourselves for the data exclusivity in who group III patients to expire in March March of 2024, which is only two year delay.
Are there unique market opportunity that we can grow into so and then obviously United Therapeutics is successful in there additional studies I think so and broader populations in COPD and.
I L D and obviously when we had the chance to penetrate those markets. We certainly well so lots of lots of head just with what we have but certainly more opportunity to further improve the delivery of this important therapy to patients.
That.
Maybe Mike if you could talk about launch prep.
Yeah, absolutely thanks, Roger and thanks for the question.
I'm, sorry, but I think I just wanted to point out that the Arabian.
Acquisition.
Aside from providing positive cash flow to the company.
The strategic part of that transaction of bringing in an existing commercial infrastructure with a small targeted sales force.
We also have.
A wonderful head of commercial Scott Maw, who came as part of that transaction.
Springboards us do to prepare for a launch of <unk> and.
So just to give you an idea of timing. We are we are in full scale up mode.
Recently hired a head of sales.
We're building out our medical affairs team.
We are we are preparing for for success in preparing to launch <unk>.
Here in 2022, now we are not going to get into specifics on the size of the sales force, but we feel confident that.
We will have a nimble.
And professional sales force that will be able to compete and win share for for your drop yet.
So we are excited for what comes in 2022, and we're prepared to ramp up.
Appropriately as we as we head towards launch.
Thank you great answer Mike Sebastien.
So revenue net income adjusted litigation question and lunch.
Sure. So thanks for the question as to whether we would launch at risk if we havent gotten that decision by the end of the 30 months stay that's a decision that we won't be able to make that until till that time and it will be informed by a number of data points that we just don't have right now it'll be informed by the trial to be informed by.
703 IPR so.
Certainly at that time, we will take into account all of those different factors make a mistake, but we can't provide guidance at this point because we just we just don't have that information in hand.
Great.
Thank you for your questions. Operator next question. Please.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Julian Harrison with BTG. You May proceed with your question.
Hi, Good morning. Thank you for taking my question. Just wondering if you can confirm that the FDA has not requested that a risk evaluation mitigation strategy be implemented for <unk>, assuming you gained freedom to operate later this year.
Yes, that's an easy one the answer is no. They have not again, we have draft labeling in hand product.
Therefore been declared safe and effective.
And we don't have any anything related to the API formulations would cause any concern.
Excellent thanks very much.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Roger Jeffs for any further remarks.
Great. Thank you operator.
We want to thank everyone for joining us on the call today great.
Greatly appreciate your continued interest in Laguardia and look forward to updating you about our progress throughout the year have a great day.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Thanks.
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And around the world.
Morning.
Gary.
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Yes.
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