Q3 2022 Liquidia Corp Earnings Call
Yeah.
Good morning, and welcome everyone to the liquidity out Corporation third quarter 2022 financial results and corporate update conference call.
My name is Abby 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 and instructions will be provided at that time for you to queue up for questions.
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I would like to remind everyone that this conference call is being recorded.
I will now hand, the call over to Jason a Dear senior Vice President corporate development and strategy.
Thank you I mean, it's my pleasure to welcome everyone to liquidity as third quarter 2022 financial results and corporate update conference call joining.
Joining the call today are Chief Executive Officer, Roger Jeffs, Chief Financial Officer, Micah setup General Counsel, Rusty Schindler and other members of the liquidity management team.
Before we begin please note that today's conference call will contain forward looking statements, including those statements regarding future results unaudited and forward looking financial information as well as the Companys future performance <unk> achievements. These statements are subject to known and unknown risks and uncertainties, which may cause actual results or performance to be materially different from any fee.
The results or performance expressed or implied on the call.
For additional information, including a detailed discussion of our risk factors. Please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on our website.
I'd now like to turn the call over to Roger for our prepared remarks, after which he will open the call up for your questions Roger.
Thank you Jason Good morning, everyone and thank you for joining us.
I believe we will look back at the third quarter as the seminal point in our mission to bring <unk> to patients, notably and address Rusty will expand on shortly we achieved outcomes in our legal proceedings that it's simply affirmed on appeal will allow us to luxury trip yet that's all of the asserted patent claims have been found in at least one proceeding to be invalid or not infringed.
Our primary goal is to obtain the affirmations of these favorable decisions as quickly as possible. So that your trip you can become an important important treatment choice for patients physicians and payors.
Our drive to get to the market is greatly strengthened by robust patient I think it says.
Physician feedback even after the launch of Petabytes of DPI.
The two primary unique product pillars that resonate firmly with patients and physicians are one the high degree of Tolerability and associated does that flexibility enabled by our print formulation to the ease of use that the leverage distance device.
Firstly with regards to the high degree of Tolerability and does flexibility.
We have observed in our open label extension exposures that we have observed in our open label extension study exposures up to $238 five micrograms of your trip yeah.
Which equates to greater than or equal to 27 breath that basin, which as you may know has a labor.
Label therapeutic target of between nine to 12 breaths per session.
<unk> tolerability limitations.
Trucking is radically different dose profile.
Secondly, transplants, the therapeutic utility of it helps your personnel delivery.
Typically the ability to modulate your trip. It does have a wide range makes a customizable for a broader spectrum of ph patients.
Patients naive to therapy.
In place of oral prostacyclin therapy.
Patients intolerant to oral prostacyclin therapies for transitions from other less flexible inhaled therapies and even patients improved on parental therapies, given patients will now be able to achieve parental liked those exposures.
This broad and customizable best profile it is easy to envision.
You can quickly asserted itself has the highest utility truck pass to him off.
Obviating the need to endure the route specific side effects of oil and parental therapy.
These dose dosing benefits are further augmented by the second pillar of your trip yeah. The ease of use the late receipts, that's dry powder inhaler.
Device that is robust patient misused and without specific orientation requirements either of which could result in poor drug delivery or even spillage from the competitors hydrus device.
The truck is.
Device specific.
Advantages.
Further strengthen the position of your trip yet the dominant choice.
Important to note that the benefit of a low resistant device to deliver your trip. You also means that the therapy is highly agnostic to the presence of comorbid lung dysfunction.
This advantage will be especially relevant in ph ILD patients, who may not have the inspector a capacity to use the hybrid systems device and should further enhance patient uptake would be truck yet as the preferred choice in this rapidly expanding market opportunity.
With these product attributes and benefits it is easy to envision that your trip you can quickly become the best in class and first in choice Prostacyclin broken P. H N ph ILD populations.
I'd now like to turn the call over to Rusty for an update on the legal proceedings.
Thanks Roger.
As Roger mentioned.
Paths for resolution of the litigation is now clear.
The company has now demonstrated two proceedings in the court and then parallel inter parties review proceedings before the patent trial and appeal board that each of the claims asserted by United Therapeutics against the company or invalid or not infringed.
Although the district court ruled against liquidity on the 703 patent that ruling will be overridden by the <unk> decision on the 783 patents if it has affirmed on appeal.
The decisions we have received from the district court in the pizza or all affirmed on appeal liquidity it will be able to seek final approval of <unk>.
Not needing to have any of the decisions overturned.
With these decisions in hand, our focus is now on timing.
The district Court decision and the nano won IPR decision or are already underway.
United Therapeutics filed a request for rehearing and request for Precedential opinions panel review of the <unk> decision regarding the 793 pads.
Precedential opinion panel request has already been denied if the rehearing request is similarly denied we would anticipate that the appeal of the <unk> decision on the 703 patent will likely take approximately 12 to 14 months from the date of the denial.
We also note that there are opportunities for this timeline to be accelerated.
Since it is not uncommon for the federal circuit issued summary permits of the underlying P tab decision within days of the oral argument.
This was to occur that could accelerate our projected timeline of the appeal by several months in.
In summary, we remain confident that the conclusion at the conclusion of the appeals process. We will be found not to have infringed any valid patent claims, allowing us to seek final approval from the FDA and we will do everything we can to proceed through the appeals process as quickly as possible.
I'll now pass the call on to Mike for an overview of our financial report Mike.
Thank you Ravi and good morning, everyone. Our third quarter 2022 financial results can be found in the press release issued earlier today and our Form 10-Q filed with the SEC after market closes today.
Documents, you'll see that.
Revenue was $3 $2 million for the three months ended June 32022, compared to $3 $2 million from the third quarter of 2012.
Revenue related primarily to the sale of <unk> injection under the cooperative agreement Mcdonald unit volume was strong and it increased each quarter.
Thank you and second quarter 2021, however, due to a negative adjustment in the gross to net reserves net revenue decreased slightly compared to last quarter.
Cost of revenue was <unk> $7 million for the quarter, which was the same compared to the third quarter 2021.
Research and development expenses were $4 $5 million for the quarter, which was the same compared to the third quarter 2021, when you hold $1 $5 million related to your traffic compared to $1 $4 million.
During the same quarter to prior year.
General and administrative expenses were $6 $7 million compared with $4 9 million the increase of $1 $8 million was primarily due to a $2 $2 million increase in commercial marketing personal expenses in preparation for potential commercialization of your check.
Offset by a <unk> $9 million decrease in legal fees related to our ongoing <unk>.
Related litigation.
Other expenses in the quarter totaled <unk> $3 million, an increase of zero point $1 million over the same quarter last year related to interest expense due to a higher debt balance and interest rate on our debt with Silicon Valley Bank.
All told we incurred a net loss in the third quarter 2022 of $9 1 million or <unk> 14 per day.
And diluted share compared to a net loss of $33 million or <unk> 14 per basic and diluted Derrick.
Third quarter 2021.
Turning to our balance sheet, we ended the third quarter with cash and cash equivalents totaling $98 3 million.
As compared to $57 5 million.
Number 31 2021.
We believe that the cash on hand, combined with revenue from scrap and injecting well supported operation into 2024.
I would now like to call turn the call back over to Roger.
Thank you Mike and thank you Rusty at this time I would now like to open the call for questions. Operator first question. Please.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press Star one on your telephone keypad.
We will pause for a moment to compile the question and answer roster.
Okay.
Your first question comes from the line of Greg Harrison from Bank of America. Your line is open.
Hey, good morning, Thanks for taking our question.
I'm wondering what is the path to get in ph ILD on the label.
<unk> said that no additional studies are required.
Just wanted to see what are the logistical steps necessary and the timing.
It could be expected there.
Hi, great. Thanks, Thank you for the question.
So as you know the market exclusivity for <unk> ph ILD expires in March of 'twenty four.
We've confirmed with the FDA that no additional studies are required for the expansion of our label to include ph ILD indication.
So for us what we need to do is.
Submit a request for that approval and at appropriate time in advance of the March 24 deadline.
We may also then have to get the.
Safety update sort of real time from our ongoing open label extension study, but absent that there's there's nothing else to do so I'm sorry about that Curt no further studies required.
Absolutely an open marketplace at the end of the March period.
If we are granted approval.
Great. Thanks for taking the question.
Your next question comes from the line of Chris Howerton from Jefferies. Your line is open.
Great. Thank you so much for taking the questions I guess.
First I was curious if we could get any visibility on the generic or modular business for next year.
Just if there would be any growth expected or if we should again, just kind of expect a flat kind of business there.
The second question I had was maybe just kind of a clarification I'm sorry. It took me a minute to dial into the call, but with respect to United Therapeutics request for hearing and if that is in fact denied.
Could you help us understand what the timeline might be for an appeal process for them I think on the 793 patent and then if you'll entertain a third question. Just curious how you guys are thinking about financing right now.
Going through next year and getting through 'twenty, four and beyond thanks, so much.
Great. Good morning, Christian Thanks for the questions.
Oh, great. Thanks, Dan.
Sure.
And rescue to answer so much.
Mike could you could answer the question about your remodeling.
Trajectory and then also how we're looking at financing and then pass it to rest you talk about the request for the topline.
Yeah, absolutely Ross Good morning, Christian will talk to you as it relates to generic or module.
We said earlier today.
We've seen unit increase on a quarterly basis each quarter since since the launch of <unk> in Q2 of 2021.
We've seen we're very happy with the growth and the product is as we said and as we said previously we really look at generic for module.
More of an annuity so.
Although we're continuing to see that growth.
Yes.
We would not see us we would not expect to see a significant increase in revenue as we get into 2023 and 24, although it remains a very important strategic product for us.
We prepare to launch for your traffic.
<unk>, we do look at it as more of an annuity.
Maybe.
Flat to modest increase as we as we look into 2023.
Looking at financing as we said we ended the quarter with about $98 million in cash we feel that that runway it gives us.
Significant Fisher.
Patient capital to get us into 2024.
As we've done over the last couple of years and we will continue to do is we're going to be opportunistic we're going to look at any opportunities to bring in.
Both dilutive and non dilutive financing.
Given where we are right now, we're very confident with our cash position to be able to execute on our on our objectives for 2023.
But at the same time, we will leave no stone unturned.
Leave no stone unturned in evaluating opportunities and we feel if there is an opportunity to bring additional capital and that's in the best interest of our shareholders. We will we will absolutely consider that.
With that let me turn it over to Rusty on the on the.
Got it.
Rehearing request for questions.
Thanks, Mike and thanks, Chris for the question so as I noted earlier.
United Therapeutics requested two things in response to the Pizza have decision they asked for a rehearing and they asked for a precedential opinion panel review.
The presidential opinion panel review has been denied which clears the way for the original Pizza hut panel to now make a ruling on the rehearing request.
I think your question primarily related to the end of the timeline after.
Rehearing request is denied or does the timeline look like after that.
We anticipate that the appeals timeline will take approximately 12 to 14 months following the denial of the rehearing request.
However that 12 to 14 months period can be accelerated so as I mentioned earlier.
Sometimes the federal circuit will do something called the summary, deferments were within days after the oral arguments they'll issue their decision rather than taking months to write opinion. So.
So again that 12 to 14 month time period, there are opportunities for.
Fairly significant number of months to be taken off that timeline, if something like some re affirm is supposed to happen.
Yes.
Yeah, Okay got it and maybe just a slight clarification there too is with respect to the PLP process. I think you had mentioned to me previously arrested that in fact could offer some of those synergies is that fair and if true what would those.
In the press excuse me.
Sorry can you just can you repeat the question.
I'm, so sorry, I was trying to cough.
Yes.
I guess my question is the P. O P denial that we just went through I think you previously had told me that provide synergies in the process and time efficiencies is that kind of what youre talking about here.
No.
It's really a separate process so I think.
Our view of the presidential opinion panel requests as we had.
Indicated in our press release several weeks ago, we think that they have directed the original panel to clarify their opinion.
We do think that will be helpful. On the appeals process that we think are clearer.
A decision from the <unk> tab.
Make the appeals process.
Because of the Appeals court will have a clearer decision that theyre dealing with.
Don't know that it would necessarily impact the timeline.
But I think it should make for a better appeals process, because again that the issues of just be much clearer before the appeals court as to what the record Duffy of the piece that was.
Okay. That's fair. Thank you so much.
Great. Thank you.
Operator next question please.
Your next question comes from the line of Julian Harris from <unk> Your.
Your line is open.
Hi, Good morning, Thank you for taking my questions sorry, if I missed it just now but.
If you have a good sense for the timeline for hatch Waxman Appeals and in the event. The <unk> appeal is denied in your favor with hatch Waxman appeal is still pending can you be in a position to launch <unk> at risk.
Yes, Brett.
Please.
Sure.
<unk>.
We do not need.
The hatch Waxman appeal to be resolved before we would be able to launch. So if for instance, the 780 <unk> appeal was resolved and it was a firms.
That's all we need to then seek final approval from the FDA now obviously.
Outcome of the appeal of the hatch Waxman would still be relevant but from a timeline perspective.
Getting to an appeal decision in the hatch Waxman cases, not it's not a critical part of the timeline.
Okay, great. Thanks.
Thank you Julien.
Operator next question please.
Your next question comes from the line of Matt Kaplan from Ladenburg. Your line is open.
Hi, good morning.
Can you give us some sense of the feedback you've been getting and response from doctors I guess to the data that you presented I guess, most recently at the chest meeting and how that plays into your plans to commercialization preparation plans.
Here too.
Approval.
Yeah happy to do that so.
I'll, maybe start with the answer and then I'll ask our CMO, Dr. Rajiv soccer to ASO. Upon so we presented two abstracts at <unk> one was on the robustness.
Of our device, particularly the patient misuse scenarios for example patients dropping the device inadvertently and.
And we showed that it was highly robust and didn't result in any products village.
We also presented longer term extension data for patients who had gone out to two years and the importance of that data.
We're showing higher dose exposures.
As we said in the opening up to $238, five micrograms, which would be 27 breaths equivalents per session.
So sort of a.
A new modality of treatment with <unk> versus <unk>. So in particular.
Nebulize formulations.
The advantage is that it is that it.
There's great acknowledgment.
<unk> is important.
The other thing it does which we tried to talk to you in the opening is that it.
It's going to appear avail itself.
Reach of patients across a greater continuum, and we think can help displace oral therapy. So as an example, I think just last week, United Therapeutics Press released what they call. It the expedite study.
And that steady used parenteral induction to get patients to clinically impactful oral benefit to me what that study acknowledged that.
So this is important because what they were trying to do is drive dose.
For oral by easing in three.
Three to eight week induction period.
In the hospital and out of hospitals, a rigorous induction.
It also has an admission that titration to an efficacious dose on oral is problematic. So I think it does is important and that study because they need to do at the parental induction speaks to the fact that getting to an efficacious does an oral is problematic.
The fact that it took eight weeks to ramp and was done as I said, sometimes as an in patient share.
<unk> House.
Person doing that would be.
And then the transition from that induction on torrential back to oil again took one to three weeks.
Again, including inpatient studies so.
Inpatient transition so.
And then interestingly during the induction, which was supposed to solve to get patients to dose patients experienced headache, nausea, and vomiting, So gi distress, which is which they were greatly trying to RBI.
The reduction so.
That is a perfect example.
All of that publication to show the value of <unk> and how it can be used both early in the treatment of course as the first choice and best choice Prostacyclin, and Rajiv maybe I could pass it over to you for some of your comments on the clinical presentation at the conference.
Yes, Thanks, Roger I think thanks.
Thanks, Matt for the question.
I think you explained the two clinical abstracts that we had presented but I think I'll take this time to maybe.
Talk about a little bit how we can springboard.
Great.
These exciting learnings from from not only our published inspire data, but also our ongoing inspire open label extension study and in addition to the device robustness that Roger just talked about then and really understand that over the next the next year and in prior to launch we will be definitely moving forward.
With several of sort of phase four escalate critical studies and really focusing on positioning <unk> as the highest utility and best in class and first choice cross noise therapy across th that will maximize our experience for this launch and then in particular, we would like to focus on studies <unk>.
The rising concepts.
From these learnings, including sort of rapid and high dose titration strategy is to improve clinical risk profiles improve exercise capacity that is customizable to treat various severities as well as low as well as intermediate and high risk strata inclusive of incident in prep.
Patients with pulmonary hypertension, and finally, we will also focus on gaining real world experience using <unk> in patients with pulmonary hypertension associated with interstitial lung disease, all to prepare us for a pending launch.
Thank you Roger.
Thank you Rajeev I think what you're saying I mean I appreciate the question Matt.
The importance of dose.
Flexibilities in Turkey of course to all different kinds of patients, we think really well established with animals.
The best choice in the first place.
You for the question.
Operator next question please.
Okay.
Again, if he would like to ask a question press star one on your telephone keypad.
Your next question comes from the line of Serge Belanger from Needham and company. Your line is open.
Hi, good morning, Thanks for taking my questions.
<unk>.
A few mostly on the ongoing legal processes.
I guess for Rusty when do you expect to hear a decision from <unk> on.
Rehearing request.
And you talked about a potential 12 to 14 months process.
For the appeals.
Just curious when do you when would you expect some visibility on whether that <unk>.
12% to 14 months timeline could be reduced.
And then lastly.
The appeals for the.
District Court ruling.
Give us some timelines on that thank you.
Thank you Ross.
Thanks, Eric so.
Through the three questions.
Order so as to when we expect the rehearing request decision.
And I think we May have said on prior calls the P. Tabs internal goal for processing rehearing request is one months from the date. The rehearing request is submitted obviously at this point, we're two five months almost three months from the date of the submission.
With the presidential opinion panel decision, having now come down.
The path is clear for the <unk> the original Pizza panel to make a final decision on the rehearing request so.
Our hope is.
Within the next few weeks, but we don't have visibility as to that process and as evidenced by our experienced with the 901 patent in that instance, it took the <unk> panel seven months before they issued a rehearing decision.
So again, our hope is its weak spot.
We don't have visibility as to that process.
Second as far as the when we would know.
Whether that 12 to 14 month time period describes.
It could be shortened.
That is unclear. So for instance, if it's a summary affirming.
If that's the one of the things that were shortened time period, we won't know that until the until the decision is made there is no you don't get any sort of indication in advance that youre going to get a summary permits.
So we would go into the oral argument and then three days later and opinion would come down.
And that's when we would know so it would be at the very end of the time periods suddenly have just be over instead of waiting a few months for an opinion.
So again, we won't know necessarily in advance when that when and if that time period will be shortened.
Finally on the appeals from the District Court.
As well, we think it's a 12 to 14 months process from the date that notice of appeal was filed.
Initial notice of appeal was filed.
In early to mid September .
So again, we think 12 to 14 months.
As a reasonable time period from then so that would put it some time to third to fourth quarter next year.
The one thing I noticed in the hatch Waxman.
Context, some of your permits is far less likely.
In fact, because there we'd be hoping to overturn a decision you can't get a summary affirm its as if something Steve overturned so there wouldn't necessarily be the same opportunities for that timeline to be shortened.
As there are for the <unk> appeal.
Thanks.
Great. Thanks for those details.
Thank you for asking for that clarification.
There are no further questions at this time, Mr. Roger Jeff I'll turn the call back over to you.
Great. Thank you Andy.
With no further questions again, we thank you for joining us today and look forward to reporting our continued progress in the coming quarters.
This concludes today's conference call you may now disconnect.
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