Q4 2022 Liquidia Corp Earnings Call
Speaker 1: I'll see you next time.
Speaker 1: one
Speaker 2: Good morning and welcome everyone to the Liquidia Corporation's full year 2022 financial results and corporate update conference call. My name is Chris and I'll 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.
Speaker 2: Instructions will be provided at that time for you to queue up for questions.
Speaker 2: I would like to remind everyone that this conference call is being recorded, and I will now hand the call over to Jason Adair, Senior Vice President, Corporate Development and Strategy. Sir, please go ahead.
Speaker 3: Thank you, Chris. It's my pleasure to welcome everyone to Liquidius' full year 2022 Financial Results and Corporate Update conference call.
Speaker 3: Joining the call today are Chief Executive Officer Roger Jeff, Chief Medical Officer Dr. Rajeev Sagar, Chief Financial Officer Michael Casetta, and General Counsel, Rafi Khyenwar.
Speaker 3: 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 company's future performance and or achievements.
Speaker 3: These statements are subject to known and unknown risks and uncertainties, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied on this call.
Speaker 3: 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.
Speaker 3: The company will file its 10k on Monday, March 20th.
Speaker 3: I would now like to turn the call over to Roger for our prepared remarks, after which he will open the call up for your questions.
Speaker 4: Thank you, Jason. Good morning, everyone, and thank you for joining us.
Speaker 4: As I look back on 2022, my first year as CEO at Liquitea, I remain humbled to have joined an organisation to employ ourselves.
Speaker 4: My new practice to join the company in an operational role was related to the potential trivia to universally transform problems with cyclone therapy from a high-burden treatment option to a low-burden option for patients.
Speaker 4: Specifically, four key attributes resonate with me. UTREPIA's tolerability, UTREPIA's titrateability, UTREPIA's durability, and UTREPIA's usability and portability.
Speaker 4: These four attributes continue to resonate with...
Speaker 4: and support my belief that utrephia has potential to be the prostacyclin therapy of first choice and best in class in health therapy for patients with either PH or PHILD.
Speaker 4: Open label extension data that continues to mature only further condimentally in the commercial potential of Trepia to participate significantly in what is now the fastest growing segment of the Asian Mustang Zacinii market.
Speaker 4: The other main things I'd like to join you in is the event strength of the entire organization and our internal capability to manufacture a substance in-house.
Speaker 4: Of course, it also didn't hurt that we already had tentative approval and labeling in hand.
Speaker 4: In 2022, we make key strategic hires to strengthen our core capabilities.
Speaker 4: And in concert with our legal success in 2022, Liquidia is now well positioned to maximize the commercial uptake of eutrepio.
Speaker 4: I'd like to now turn the call over to Rajeev Sava, our CMO and one of those key 2022 suppliers to stand up while we are so excited about Dutrevy's unique product profile and why we believe we are ideally positioned to provide a differentiated best-in-class option for patients. Rajeev?
Speaker 5: Thank you, Roger, and good morning, everyone.
Speaker 5: In recent months, our team has engaged with the medical community about certain topics related to utrebin, such as its product profile, the benefits of low-resistance dry powder inhaler device for patients, and the benefits of the use of a dry powder inhaler device for patients.
Speaker 5: and our upcoming clinical plan.
Speaker 5: Today, I thought I would briefly touch on this point.
Speaker 5: Trepio has designed a specific goal in line to deliver true cross-melt to the deepest parts of the lung.
Speaker 5: across a wide range of doses and a broad range of patients with varying lung function.
Speaker 5: To achieve this objective, we combined the whole print technology with the RS-00 Plastiafe Dry Powder Inhaler, a simple, proven device used successfully by many tens of thousands of adults and children with breathing-related problems such as COPD and asthma. To the first point of expanding the dose range, we used the RS-00 Plastiafe Dry Powder Inhaler to achieve this objective.
Speaker 5: A clinical study in pulmonary arterial hypertension, or PAH, proved that a 79.5 microgram dose of Utreista was found missing before casting for a
Speaker 5: is delivered at bile equivalent doses to nine breaths of nebulized Tybasin.
Speaker 5: But more importantly, Eutropia has been safely and conveniently titrated, the doses comparable to 27 breaths of Taiveso.
Speaker 5: A level rarely, if ever, achieved with the NegriLizer.
Speaker 5: To the second point, a variable level of low-end DPI proved easy to use without need for advanced technology to train patients.
Speaker 5: and further demonstrated it is robust enough to keep you from dropping or positioning in a myriad of ways.
Speaker 5: In fact, given the device's proven track record with obstructive lung diseases, there's considerable interest among medical professionals to use utopia, particularly for patients with pulmonary hypertension associated with interstitial lung disease or PH dialysis, where lung restriction and impaired respiratory effort are common.
Speaker 5: Put simply, the uniform print particles are in the ideal respirable range for deep lung delivery, providing consistent and effective delivery with a low-persistent device across a wide range of inspiratory efforts for PAH and PHILD patients.
Speaker 5: To further inform the use of utrepsia, we invented a clinical trial later this year that will generate data on how utrepsia may be best utilized in pH...
Speaker 5: We think an open label study would greatly benefit our understanding of tolerability and the ability to titrate in this patient population.
Speaker 5: I'm again excited to move closer to the potential launch of use of drug use. I'd like now to turn the call over to Rusty for an update on the legal proceedings. Rusty? Okay. Okay.
Speaker 6: Thank you, Rajiv.
Speaker 7: As a reminder, the company has received rulings through proceedings in the court and in parallel in part of this review proceedings before the patent for the patent board or CTAB.
Speaker 7: that all of the claims in the three patents asserted by United Therapeutics against the company are either invalid or not infringed by Liquidia. Over the last several months, we have seen further progress in our litigation to bring Utreppy to market.
Speaker 7: First, we are pleased with the PTEP's decision in February to reject United Therapeutics' request for a rehearing of the 793 IPR.
Speaker 7: In its decision, the PCAB clarified the grounds upon which it found that all the claims in the 793 patent were unpatentable.
Speaker 7: United Therapeutics now is 63 days from the decision date of February 2nd to file an appeal of the PTAB's decision. Assuming UT files an appeal, which they have publicly stated they will, we would project that oral arguments could occur as early as late fourth quarter 2023 or first quarter 2024. tables orands.
Speaker 7: We would then anticipate that a decision could be rendered by the court as early as a few days after oral argument if the court issues a summary affirmance.
Speaker 7: or within a few months after oral argument if a full written opinion is issued.
Speaker 7: Second, we are pleased with the progress in the appeal of the District Court's decision in the Hatch-Watsman trial. Briefing in that appeal has now been completed and the court is in the process of scheduling oral arguments, which we expect to occur sometime in the second or third quarter of 2023.
Speaker 7: As with the appeal of the 793 IPR, we would expect to receive a written decision of the court within a few months after oral argument.
Speaker 7: For all of these appeals, we will not summarize our arguments here.
Speaker 7: But all briefings are of course available to the public through the court's pacer system.
Speaker 7: Lastly, there may be opportunities to accelerate the timeline in one or both appeal proceedings, and we will seek opportunities to proceed through the appeals process as quickly as possible.
Speaker 7: Finally, it is notable that United Therapeutics did not appeal the Hatch-Waxman decision related to the 901 patent. So that patent is no longer an impediment to our launch of eTrepio.
Speaker 7: With the 901 patent having been dropped, we would now be able to seek final approval for eTREPA if the decision of the District Court in the Hatch-Waxman litigation is affirmed on appeal with respect to the 066 patent, and either the District Court's decision regarding the 793 patent is reversed on appeal, or the PTAB's decision regarding the 793 patent is affirmed on appeal.
Speaker 7: In short, if the original decisions are affirmed on appeal, then we can seek final approval of UTRIPIA immediately.
Speaker 5: I will now pass the call on to Mike for an overview of our financial reporting. Mike? Thank you, Rusty, and good morning, everyone. Before I address the results for the full year 2022, I wanted to briefly comment on the security of our funds in relationship to SBB, a bank with whom we've had a relationship for about two years. To test the v balloons, toLean impressb fabrics, to isot Edward
Speaker 8: As previously disclosed, we repaid all debt owed to SBB back in January as part of the financing agreement with healthcare royalty partners. We also have maintained all cash and cash equivalents at SBB, 99% of which was held in a BlackRock mutual fund and the remainder of which was held in an operating account.
Speaker 8: On Tuesday this week, substantially all of our cash was transferred out of SBB to an accredited financial institution. We will continue to evaluate our cash management and investment policies in an effort to protect our capital from events similar to what occurred in the last week. Turning to our full year 2022 financial results, which could be found in the press release of today, you will see that.
Speaker 8: Revenue increased to $15.9 million for the year ended December 31, 2022, compared with $12.9 million for the prior year. The profit split percentage we received under a promotion agreement with Sandoz was 50% for the entire year, whereas in 2021, the profit split percentage decreased from 80% to 50% as a result of achievement.
Speaker 8: year. 2022 included a full year of Salesforce related costs, as well as amortization of the intangible asset associated with the promotion agreement.
Speaker 8: Research and Development Expenses in 2022.
Speaker 8: of 19.4 million for the full year, compared with 20.5 million the year prior. The decrease of $1.1 million or 5% was primarily due to a $0.9 million decrease in personnel consulting and stock-based compensation expected.
Speaker 8: General and administrative expenses were $32.4 million for the full year of 2022 compared to $23.1 million for the prior year.
Speaker 8: The increase of $9.3 million, or 40%, was primarily due to a $4.2 million increase in commercial, marketing, and personnel expenses in preparation for the potential commercialization of UTREPIA and a $3.1 million increase in the retail industry.
Speaker 8: in stock-based compensation expense driven by an option modification charge recorded in the first quarter of 2022.
Speaker 8: In summary, we have incurred a net loss of $41 million, or 67 cents per basic and diluted share, compared to a net loss of $34.6 million, or 70 cents per basic and diluted share, for the year ended December 31, 2021.
Speaker 8: Turning to our balance sheet, we end at 2022 with $93.3 million of cash on hand. We further strengthened our access to capital in January through the Revenue Interest Financing Agreement with Healthcare Royalty for up to $100 million in four tranches.
Speaker 8: dollar increase in cash after paying off the SVB debt facility.
Speaker 8: The remaining tranches are related to one, clearance of the legal pathway, two, acquisition of an internal asset, and three, mutual agreement of the parties.
Speaker 8: I would now like to turn the call back over to Roger.
Speaker 4: Thank you, Mike. Reflecting on the previous year, I can say with 100% confidence, we can be prepared to deliver a full potential of our product and product around the nation. At this time, I would now like to open up to questions. Operator, first question.
Speaker 2: Thank you. Before that, as a reminder, to ask a question, please press star 11 on your phone and wait for your name to be announced. To withdraw your question, please press star 11 again. And by as I compile the Q&A roster.
Speaker 2: Thank you. Before that, as a reminder, to ask a question, please press star 11 on your phone and wait for your name to be announced. To withdraw your question, please press star 11 again. Stand by as we compile the Q&A roster. And one moment, please, for our first question.
Speaker 2: Our first question will come from Gregory Harrison of Bank of America. Your line is open. Hello, everybody.
Speaker 4: Hey, good morning. Thanks for taking the question. As you start to get closer to launch, what feedback are you receiving from physicians or patients regarding the differentiation between UTRAPIA and type A so DPI and the demand for UTRAPIA when you come to market?
Speaker 4: Hi, good morning. I have a question and then we're excited to answer. At this time, I'd like to pass that to Rajeev and then you can get some thoughts on the conference you've had with various KOLs and then your own reflections on what differentiates you potentially from other DPIs in the space. Robiber there.
Speaker 5: Thanks, Greg. Thanks for the opportunity to answer this question.
Speaker 5: First thing is that I think it's very important that Uterpia has been studied in pulmonary children hypertension patients in the
Speaker 5: vascular injury, but they also have an interstitial disease which causes a inhibition force but vinyl capacity
Speaker 5: We believe this is where you trep AI has the ability to shine in part because of its low resistance device that we're using we believe this will this will this will allow the Limitations of the patient's lung function to be better tolerable and suitable before a device in particular
To that end, we are hearing that our device, at least in those practitioners who have used it in our Inspire registry, feel like it has similarities to the simplicity of the nebulizer, but of course has all the benefits of a dry powder inhaler such as portability.
To this point, we think, Greg, it's very important that we study some of these product profiles of utrepsia specifically in PHLD where we believe this will have the highest utility and impact in. And that's where we alluded to that we will move forward with an open label study to really showcase and highlight one, the tolerability of utrepsia in this patient population. As you know, Margaret McC1959 was one of the Cr
There has not been an official study using a dry powder inhaler in PHLD, so we believe this is important for the community and KOLS to experience. The second thing is to showcase our ability not only in the tolerability but as such because of that improved tolerability we should see titrateability.
to higher doses in this patient population. So we look forward to initiating study by the end of the year.
Thank you very much Brigitte, great answer and it really sort of solidifies why we're so excited about the product profile of eTrapian, our ability to capture significant share of the market.
Operator, next question, please. Thank you. One moment, please, for our next question. Our next question will come from Kanbiz Yazzie of Jeffries. Your line is open. Morning, team. Can you provide any grainy layer D?
Good morning, Combs. Great to hear from you as well. In terms of gating factors to starting studies, really that's just our ability to get the protocol approved at ethics committees.
CROs engaged in and really just CTM for the study supplied. So that's fairly simplistic. We're working on that now and it's our intention to start those studies in the coming quarters. And then in terms of PHILD, I'll question I'll let Regine speak to that.
Thanks, Kambi. I think what we're hearing is several things. There's one, I think patients without a doubt like the convenience of a dry powder inhaler.
So that's a fact. Number two, you know these patients that have pulmonary hypertension associated with interstitial lung disease...
patient with and others personal problems that we driving the
Hey, Chris, this is Jason Adair. Rajiv, you cut out there, I started to explain the PHILD.
I'm not sure if you can read it now.
Yes, so in particular with PHLD, because of their inherent limitations with cough in general, we understand that there's a certain number of patients in this population that tend to have President'smpbing when exposed to a high resistance
And so, you know, if this is done improperly, that potentially can cause the patient to have additional cough and limitations when they're exposed to certain types of dry powder inhalers.
Thank you. Thank you for the importance now of our own step in patients with PAD child. It could be possible that not only the tolerability but the rate of titration.
that would be a little bit different from our archaeal hyper-transactions. We think given the profile of our product, we're well positioned to test that. And that shows the best. Operator, next question please.
Thank you.
Thank you. One moment please for our next question.
Our next question will come from Serge Bellinger of Needham. Your line is open.
Hi. Good morning.
It's just one question. Thank you, Roger. You've highlighted over the last few quarters how you've highlighted over the last few quarters how you've highlighted over the last few quarters
It's just one question. Thank you, Roger. You've highlighted over the last few quarters how eutrophia got efficiency, independence, characteristics
Yutribia inhaler is a low resistance DPI inhaler and highlighted some of the benefits there. Maybe just talk about what are the benefits and how that inhaler differentiates the product from Tybasal DPI. Thank you. Yeah, that's a great question. And I'll team up again with Rajeev to answer this question. But I think a lot of our answer is going to be predicated on the fact.
to highlight what Roger just noted. You know the innovative technology allows for these drug particles that require almost no adiabrasion and what that means is that eutrepia does not have to overcome such barriers. The print powder is already just broken to its own. The particles have already been sized to be positive deep in the lung.
And a low resistance inhaler device is obviously the most suitable protection for our print technology.
And by already optimizing the size and shape of these drug particles, the PRINT essentially enables a more ideal dry powder experience across a broad range of insipatory flow rates. And this is one thing you know effectively that simple tip is probably one of the key reasons that there's growing excitement to bring eutrepia into the market.
into PHL. Thank you, Rajiv. So I think, again, it's the formulation that is really having the ability to use.
built with the differentiated delivery platform Without the need to be a glomer which we reach the higher resistance device Capacity to do that and we think that then any certain limitations are there
I will have a leading entry into the Mark 1 project. Operator, next question.
Thank you. One moment for the next question.
One moment for the next question.
Our next question will come from Julian Harrison of VTIG. Your line is open.
Hi, good morning. Thank you for taking my question. I'm wondering if Sir Tatterseft has any bearing on the DPI-Tripostanil market opportunity in your mind?
Yeah, great question, Julian. And again, I want to tag team with Rajeev. So I think, first, let's just say it's an exciting time in pulmonary hypertension research. New mechanisms, new analysis, new fits, particularly as it adds on to triple-knot therapy is impressive. And I think there's general growing excitement, including our own, around.
how we interact with these new modalities. I've been in this field for 30 plus years, and every time a treatment has come in, there's been a presentation that replaced previous methodologies or treatments....
and added to the therapy period. And I see this, you know, the Sertatoin study was an add-on to other therapies. The best benefit is working in prostacyclins. In those patients, the prostacyclin dose was held steady. They were testing, you know, the test patient. And I think it would be exciting now to see.
The future will be the first choice, the change in option, and capture significant share of a market which has plenty of opportunity for not only NR drugs but obviously other inhaled, but also to process meals as well.
In my belief, it will remain a state of therapy. They're the only drug that can be titrated to effect. And given that, it's a life benefit that will be preferable. Rashida, do you have anything to add to that? So, Julian, Roger said it excellently. I'll just add, remember, one thing for everything quite an exciting, throughout the day.
One of the key issues here is we're so focused on not only Palmer hypertension, but also specifically Palmer hypertension associated with interstitial lung disease, where satatoseps has yet not just shown a benefit. And so the entirety of both populations will be...
important and we're going to have to be driven to show our support and effectiveness in both states. Thank you. Yeah, great. Thank you. Operator, next question.
Thank you. One moment, please, for our next question.
Next question will come from Matt Kaplan of Leidenberg, your line is open.
Thank you and good morning.
Just a couple questions on following up on the PHILD opportunity. Yes. One, could you tell us a little bit about the approval pathway for PHILD? And then secondly, with your planned open label study, what are some of the endpoints you're going to look at there? And is there an opportunity to showcase?
potential improvement in efficacy due to the titrate availability. Yeah, thanks, Mack. It was good to hear. So I'll talk about pathways. As we've said before, we've confirmed with the FDA in writing that no additional studies are required for approval for PHILD patients.
Having said that, obviously we can't seek approval until the market exclusivity expires from project four. So, we'll have to do for that market post that date. So, that's the past, some of kind of how we are providing approval.
will depend on the resolution of the legal case and when we get approval for pulmonary arterial hypertension and move our tentative approval to full approval. But in general, those are the parameters that are gating for PHLD. And maybe Rajiv, if you could speak a little bit to the points that we have in there. So first of all,
as we just discussed on this call. This will be an open study specifically in PHLV. So in that regard, one of the main focuses is to really understand the tolerability of utropioid patients in this population. Remember, this is a broad range of patients with different types of heterogeneous...
So really highlighting the in that broad range population and see if there's any particular population that stands out with the best response. The second thing is that we're going to be focusing on high tradeability. We know that if this is key, certain breath equivalent.
to have a better response. We want to see if number one, we can absolutely reach those levels and more importantly exceed those levels in a tolerable fashion.
This will translate into several more data that we can acquire, including typical data points such as improved walk capacity or six minute walk distance. We can also look at various effects not only on the right ventricle itself, using non-database parameters, page definitions, research Bombard luck so
Thank you. That's very helpful.
And I see there are no further questions. I'm sorry. I see there are no further questions in the queue. I would now like to turn the conference back to Roger Jeffs for closing remarks.
I wonder if we can let Matt back in. Chris, Matt had one more question. Could you let him back in so we can ask it?
I wonder if we can let Matt back in. Matt had one more question. Could you let him back in so we can ask it? No problem. One moment, please.
Can you hear me?
Yes, Mr. Kaplan, you are now able to ask your next question. Great. Just a quick question in terms of with the moving parts associated with the hatchback litigation and the PTA group decision, what's your current thoughts on the timing for full approval now?
Yeah, great question. Maybe I'll ask Rusty to opine on sort of the how he sees the timeline for the legal situation playing out. Sure. So thanks for the question, Matt. So, you know, we really have two separate opportunities to get clear of the patents at this point. The appeal of the Hatch-Watsman decision.
we think that date will be sometime in the second quarter or third quarter of this year. And once oral argument has been held,
We expect the decision could come as quickly as a few days after oral argument or it could take a couple months depending on whether We get some reaffirmants or not and so if in that decision the 066 the district court's decision of the regarding the 066 patent is upheld and if the 793 decision of the district court is overturned we would be able to
Proceed immediately to seek full approval after that. So that would put it sometime in the second third fourth quarter this year Alternatively if that appeal results in the 066 patent decision being upheld And the 793 decision of the district court being upheld then we would have to wait for the IPR appeal to play out and as we noted we expect that
oral argument that will likely be held sometime fourth quarter this year or first quarter next year, you know, or first half of next year. And again, same thing after that oral argument is, you know, we could get a decision as quickly as a few days afterwards or as long as a few months afterwards.
Thank you, Rusty, very clear. Operator, next question if there are any.
Thank you. One moment, please. NIT, no further questions at this time in the queue. I will turn the call back to Roger Jeffs for closing remarks.
Great. And firstly, we appreciate everybody calling in and listening. I hope you share the excitement we have around our building momentum. We're really trying to build on the back of some very positive news as it related to the legal situation. And as we continue to go to the market, you can hear our excitement around the product capabilities.
… and how it could be introduced uniquely into the marketplace and benefit patients in a differentiated way. We thank you again for joining us, and we look forward to reporting on our continued progress in the coming quarters. Thank you everyone. Bye-bye.
and how it could be introduced uniquely into the marketplace and benefit patients in a differentiated way. We thank you again for joining us, and we look forward to reporting on our continued progress in the coming quarters. Thank you, everyone. internment effective day by day by day
This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.
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Good morning and welcome everyone to the liquidity of corporations full year 2022 financial results and corporate update conference call. My name is Chris and I'll be your conference operator today. Currently all participants are now 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. I would like to remind everyone that this conference call is being recorded, and I will now hand the call over to Jason Adair, Senior Vice President, Corporate Development and Strategy. Sir, please go ahead.
Thank you, Chris. It's my pleasure to welcome everyone to Liquidius' full year 2022 Financial Results and Corporate Update conference call.
Joining the call today are Chief Executive Officer Roger Jeff, Chief Medical Officer Dr. Rajeev Sagar, Chief Financial Officer Michael Casetta, and General Counsel, Rafi Shandler.
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 company's future performance and or achievements.
These statements are subject to known and unknown risks and uncertainties, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied on this 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. The company will file its 10K on Monday, March 20.
I would now like to turn the call over to Roger for our prepared remarks, after which he will open the call up for your questions. Thank you, Jason. Good morning, everyone, and thank you for joining us.
As I look back on 2022, my first year as CEO at Laquidia, I remain humbled to have joined an organization to deploy services. My new practical interest to join the company in an operational role was related to the potential of trivia to universally transform the problem of cyclone therapy.
from a high burden treatment option to a low burden option for patients. Specifically, four key attributes resonate with me. Eutrepius tolerability, Eutrepius titratability, Eutrepius durability, and Eutrepius usability and portability. These four attributes continue to resonate with me.
and support my belief that utrephia has potential to be the prostacyclin therapy of first choice and best in class inhaled therapy for patients with either PH or PHILD.
Open label extension data that continues to mature only further condiments leave in the commercial potential of Trepia to participate significantly in what is now the fastest growing segment of the agent, the pristine cross-sinnel market.
The other main things I'd like to join you in is the immense strength of the entire organization and our internal capability to manufacture a substance in-house. Of course, it also didn't hurt that we already had tentative approval and labeling in hand. In 2022, we make key strategic hires to strengthen our core capabilities. And in concert with our legal success in 2022, Liquidia is now well positioned to be the first to make a living out of the crisis.
to maximize the commercial uptake of eutrepia at the launch.
I'd like to now turn the call over to Rajeev Sava, our CMO and one of those key 2022 hires to stand up while we are so excited about Dutrevy's unique product profile and why we believe we are ideally positioned to provide a differentiated best-in-class option for patients. Rajeev? Thank you, Roger, and good morning, everyone. In recent months, our team has engaged with the medical community.
about certain topics related to eutrepin, such as its product profile, the benefits of low resistance dry powder inhaler device for patients.
and our upcoming clinical plan. Today, I thought I would briefly touch on these points.
Trepio has designed a specific goal in mind to deliver true proximal to the deepest parts of the lungs across a wide range of doses and a broad range of patients with varying lung function.
To achieve this objective, we can combine the novel print technology with the RS-00 Class D Apa dry powder inhaler. A simple, proven device used successfully by many tens of thousands of adults and children with three problems such as COPD and asthma.
To the first point of expanding the dose range, a clinical study in pulmonary arterial hypertension, or PAH, proved that a 79.5 microgram dose of utropia is delivered at bile equivalent doses to nine breaths of nebulized Tivesa.
But more importantly, utopia has been safely and conveniently titrated, the doses comparable to 27 breaths of Taiveso.
a level rarely, if ever, achieved with the nebulizer. To the second point, a variable level one, a low-end DPI proved easy to use without need for advanced technology to train patients.
and further demonstrated it is robust enough to keep the drop-offing or positioning in a myriad of ways.
In fact, given the device's proven track record with obstructive lung diseases, there's considerable interest among medical professionals to use utropia, particularly for patients with pulmonary hypertension associated with interstitial lung disease or PH dialysis, where lung restriction and impaired respiratory effort are common.
Put simply, the uniform print particles are in the ideal respirable range for deep lung delivery, providing consistent and effective delivery with a low-resid device across a wide range of inspiratory efforts for PAH and PHILD patients.
To further inform the use of utrepsia, we invented a clinical trial later this year that will generate data on how utrepsia may be best utilized in pH biology. We think an open-label study would greatly benefit our understanding of tolerability and the ability to titrate in this patient population.
I'm again sorry, I think we have moved closer to the potential launch of use of drug use. I'd like now to turn the call over to Rusty for an update on the legal proceedings. Rusty? Thank you, Rajiv.
As a reminder, the company has received rulings through proceedings in the court and in parallel in part of its review proceedings before the patent court on the patent board or CTAB that all of the claims in the three patents asserted by United Therapeutics against the company are either invalid or not infringed by liquidity.
Over the last several months, we have seen further progress in our litigation to bring Utreppy to market.
First, we are pleased with the PTEP's decision in February to reject United Therapeutics' request for a rehearing of the 793 IPR.
In its decision, the PTAB clarified the grounds upon which it found that all the claims in the 793 patent were unpatentable. United Therapeutics now is 63 days from the decision date of February 2nd to file an appeal of the PTAB's decision. Assuming UT files an appeal, which they have publicly stated they will.
we would project that oral arguments could occur as early as late fourth quarter 2023 or first quarter 2024. We would then anticipate that a decision could be rendered by the court as early as a few days after oral argument if the court issues a summary affirmance.
or within a few months after oral argument if a full written opinion is issued. Second, we are pleased with the progress in the appeal of the District Court's decision in the Hatch-Wiseman trial.
Briefing in that appeal has now been completed and the court is in the process of scheduling oral arguments, which we expect to occur sometime in the second or third quarter of 2023.
As with the appeal of the 793 IPR, we would expect to receive a written decision of the court within a few months after oral argument. For all of these appeals, we will not summarize our arguments here, but all briefings are, of course, available to the public through the court's PACER system. Lastly, there may be opportunities to accelerate the timeline in one or both appeal proceedings, and we will seek opportunities to...
proceed through the appeals process as quickly as possible. Finally, it is notable that United Therapeutics did not appeal the Hatch-Waxman decision related to the 901 patent. So that patent is no longer an impediment to our launch of eTrepio.
With the 901 patent having been dropped, we would now be able to seek final approval for eTREPA if the decision of the District Court in the Hatch-Waxman litigation is affirmed on appeal with respect to the 066 patent.
and either the district court's decision regarding the 793 patent is reversed on appeal, or the PTAB's decision regarding the 793 patent is affirmed on appeal.
In short, if the original decisions are affirmed on appeal, then we can seek final approval of eutrepia immediately. I will now pass the call on to Mike for an overview of our financial reporting. Mike?
Thank you, Rusty, and good morning, everyone. Before I address the results for the full year 2022, I wanted to briefly comment on the security of our funds in relationship to SBB, a bank with whom we've had a relationship for about two years. Thanks for joining me.
As previously disclosed, we repaid all debt owed to SBB back in January as part of the financing agreement with healthcare royalty partners.
We also had maintained all cash and cash equivalents at SBB, 99% of which was held in a BlackRock mutual fund and the remainder of which was held in an operating account.
On Tuesday this week, substantially all of our cash was transferred out of SBV to an accredited financial institution. We will continue to evaluate our cash management and investment policies in an effort to protect our capital from events similar to what occurred in the last week. Turning to our full year 2022 financial results, which can be found in the press release issue today, you will see that.
Revenue increased to $15.9 million for the year ended December 31, 2022, compared with $12.9 million for the prior year. The profit split percentage we received under a promotion agreement with Sandoz was 50% for the entire year, whereas in 2021, the profit split percentage decreased from 80% to 50% as a result of achievement of predetermined cumulative sales thresholds. Revenue in 2022 is net of $2.7 million in amortization of the contract acquisition costs associated with the promotion agreement.
Next, cost of revenue was $2.9 million for the full year 2021 compared with $3 million for the prior year. 2022 included a full year of Salesforce-related costs as well as amortization of the intangible assets associated with the promotion agreement.
Research and development expenses in 2022 of 19.4 million for the full year, compared with 20.5 million the year prior.
The decrease of $1.1 million, or 5%, was primarily due to a $0.9 million decrease in personnel, consulting, and stock-based compensation expenses.
General and administrative expenses were $32.4 million for the full year of 2022 compared to $23.1 million for the prior year.
The increase of $9.3 million, or 40%, was primarily due to a $4.2 million increase in commercial, marketing, and personnel expenses in preparation for the potential commercialization of UTREPIA and a $3.1 million increase in the retail industry.
in stock-based compensation expense driven by an option modification charge recorded in the first quarter of 2022. In summary, we have incurred a net loss of 41 million dollars or 67 cents per basic and diluted share compared to a net loss of 34.6 million dollars or 70 cents per basic and diluted share for the year ended December 31st, 2021.
Turning to our balance sheet, we ended 2022 with $93.3 million of cash on hand. We further strengthened our access to capital in January through the Revenue Interest Financing Agreement with Healthcare Royalty for up to $100 million in four tranches.
The first tranche of $32.5 million netted an approximate $10 million increase in cash after paying off the SVB debt facility. The remaining tranches are related to one, clearance of the legal pathway, two, acquisition of an internal asset, and three, mutual agreement of the parties. I would now like to turn the call back over to Roger.
Thank you, Mike. Reflecting on the previous year, I can say with 100% confidence, we have prepared just to deliver a little of our product and the future of our nation. At this time, I would now like to open to questions. First question.
Thank you. Before that, as a reminder, to ask a question, please press star 11 on your phone and wait for your name to be announced. To withdraw your question, please press star 11 again. Stand by as we compile the Q&A roster.
And one moment, please, for our first question. Our first question will come from Gregory Harrison of Bank of America. Your line is open.
Hey, good morning. Thanks for taking the question. As you start to get closer to launch, what feedback are you receiving from physicians or patients regarding the differentiation between utropia and tybaso DPI and the demand for utropia when you come to market? Yes, hi, good morning.
I have a question, and then we're excited to answer. At this time, I'd like to pass that to Ravi. Maybe you can get some thoughts on the conference that you've had with various KOLs, and then your own reflections on what differentiates you potentially from other DPIs in the space. Thanks, Barry. Thanks for the opportunity to answer this question.
First thing is that I think it's very important that utrepsia has been studied in pulmonary children hypertension patients in the FHIR database. We've been able to reach high successful utrepsia to doses equivalent up to 27 breaths four times a day of type 8, which is incredible.
I think that showcases one, our tolerability, and number two, our tight tradeability. Specifically where the concern with pulmonary hypertension associated interstitial lung disease is of importance is because this population has not only pulmonary hypertension as a vascular disease, but they also have an interstitial disease.
which causes a......force by vital capacity. We believe this is where UtrepAi has the ability to shine, in part because of its low-resistance device that we're using. We believe this will allow the limitations of the patient's lung function.
to be better tolerable and suitable for our device in particular. To that end, we are hearing that our device, at least in those practitioners who have used it in our Inspire registry, feel like it has similarities to the simplicity of the nebulizer, but of course has all the benefits of a dry powder inhaler such as portability.
To this point, we think, Greg, it's very important that we study some of these product profiles in utrepsia, specifically in PHLD, where we believe this will have the highest utility and impact in. And that's where we alluded to that we will move forward with an open label study to really showcase and highlight one, the tolerability of utrepsia in this patient population. As you know, there has not been an official study using a dry powder inhaler in PHLD, so we believe this is important.
for the community and care well to experience. And then showcase our ability, not only in the tolerability, but as such, because of that improved tolerability, we should see titrate ability to higher doses in this patient population. So we look forward to initiating study by the end of the year.
Thank you very much Brigitte, great answer and it really sort of solidifies why we're so excited about the product profile of eTrapian, our ability to capture significant share of the market. Operator, next question please.
Thank you very much for a great answer and it really sort of solidifies why we're so excited about the product profile of eTrepy and our ability to capture significant share of the market. Operator, next question, please. Thank you.
One moment, please, for our next question. Our next question will come from Cambiz Yazzie of Jeffries. Your line is open. Morning, team. Can you provide any granularity on kind of the gating factors to potentially starting a PHILD study? And then in terms of what feedback have you received on DPI's causing coughing in PHILD? Thank you so much.
Good morning, Combs. Great to hear from you as well. In terms of gating factors to starting studies, really that's just our ability to get the protocol approved in ethics committees. CRO is engaged in...
and really just CTM for the study supplied. So that's fairly simplistic. We're working on that now and it's our intention to start those studies in the coming quarters. And then in terms of PHILD, a question I'll let Rajeev speak to that. Rajeev
You know, what we're hearing is several things. There's one, I think patients without a doubt like the convenience of a dry powder inhaler. So that's a fact. Number two, you know, these patients that have pulmonary hypertension associated with interstitial lung disease.
Hey, Chris, this is Jason Adair. Reggie Lost Her Head control.
when exposed to a high resistance inhaler. And so, you know, if this is done improperly, you know, that potentially can cause the patient to have additional cough and limitations when they're exposed to certain types with dry powder inhalers.
Thank you appreciate it. So thank you to the importance now of our own step.
in patients with PAV child, it could be possible that not only the tolerability, but the rate of titration and that would be a little bit different from our arterial hypertension. We think given the profile of our product, we're well positioned to test that.
of Needham. Your line is open.
Hi, good morning.
It's just one question. Thank you, Roger. You've highlighted over the last few quarters how utopia...
Yutribia inhaler is a low resistance DPI inhaler and highlighted some of the benefits there. Maybe just talk about what are the benefits and how that inhaler differentiates the product from American-based bitch culture.
Yeah, that's a great question and I'll team up again with Rajeev to answer this question. But I think a lot of our answer is going to be predicated on the fact that it's formulation driven. It's actually the print formula of the trippinL product that allows the use of low resistance devices. There can be something you can speak to kind of.
how the formulation leads to the use of bio-convention and what combination that benefit uniquely ports. Thanks for that question. You know, I think to highlight what Roger just noted, you know, the innovative technology of the drug particles that require almost no adeagalomeration, and what that means is that the bacteria does not have to overcome such barriers.
The print powder is already just broken into its own. The particles have already been sized to be positive deep in the lung. And a low resistance inhaler device is obviously the most suitable perfection for our print technology.
And by already optimizing the size and shape of these drug particles, the print essentially enables a more ideal dry powder experience across a broad range of insipatory flow rates. And this is one thing I know effectively that simple tip is probably one of the key reasons that there's growing excitement to bring eutrepsia into the market, and that is really into PHL.
Thank you, Rashid. So I think, again, it's the formulation that is really having the ability to use.
the device. We have a very well-built, well-built, differentiated delivery platform. Without the need to be a glomer, which we require the higher resistance device, we take more capacity to do that. We think that then can be a certain limitation.
I will have a leading entry into the Mark 1 project. Operator, next question, please. Thank you. One moment for the next question. Our next question will come from Julian Harrison of VTIG. Your line is open.
Hi, good morning. Thank you for taking my question. I'm wondering if Surtadtercept has any bearing on the DPI-Tripostenil market opportunity in your mind? Yeah, great question, Julian. And again, I'll tag team with Rajiv. So I think first let's just say it's an exciting time in pulmonary hypertension research.
with these new modalities. And we said, I've been in this field for 30 plus years and every time a treatment has come in, there's been a presentation that replaced previous methodologies or treatments. It's never been born out through these.
and I see this, you know, the Sertatoin was an add-on to other therapies. The best benefit is working in prostacyclins. In those patients, the prostacyclin dose was held steady. The best benefit is working in prostacyclins. In those patients, the prostacyclin dose was held steady.
because they were testing the test patient. And I think it would be exciting now to see what happens with utrepsia and septadriceps in combination and wherever you could also be titrated on the patients specifically. So again, a lot of excitement, I think, can really change our ability to see with utrepsia.
We still think the future will be the first choice, the change in option, and capture significant share of a market which has plenty of opportunity for not only in our drugs, but obviously other inhaled hospitals as well. We're excited about process like this in my belief....they're the only drug that can be titrated to effect.
And given that, there's some life benefits that will be preferable. Rashida, do you have anything to add to that? So, Julian, Roger said it excellently. I'll just add, remember, one of the key issues here is we're so focused on not only palmar hypertension but also specifically palmar hypertension associated with interstitial lung disease where cetaterecepts has yet not just shown a benefit. And so, the entirety of both...
Your line is open.
Thank you and good morning. Just a couple questions on following up on the PHILD opportunity. Yes. One, could you tell us a little bit about the approval pathway for PHILD? And then secondly, with your planned open label study.
what are some of the endpoints you're going to look at there? And is there opportunity to showcase potential improvement in efficacy due to the titrated development? Yeah, thanks, Mac. It was good to hear. So I'll talk about pathways. So as we've said before, we've confirmed with the FDA in writing.
that no additional studies are required for approval for PHILD patients. Having said that, obviously we can't seek approval until the market exclusivity expires in March 4. So we'll have to do for that market post that date. So that's the path. Some of how we provide approval will depend on the resolution of the legal case and when we get approval.
in that regard.
One of the main focuses is to really understand the tolerability of the utropia in the population. Remember the range of patients with different types of heterogeneous phenacts for lung disease. So really highlighting the difference in that broad range population and see if there's any particular population that stands out the best response.
The second thing is that we're going to be focusing on titradability. We know that if conditions achieve certain breadth equivalent to titradability, we're going to have a better response. We want to see if number one, we can absolutely reach those levels and more importantly exceed those levels in a tolerable fashion.
This will translate into several more data that we can acquire, including typical data points such as improved walk capacity or six minute walk distance. We can also look at various effects not only on the right ventricle itself using non-relativ parameters...
and then just one.
And I see there are no further questions. I see there are no further questions in the queue. I would now like to turn the conference back to Roger Jeffs for closing remarks.
And I see there are no further questions. I'm sorry. I see there are no further questions in the queue. I would now like to turn the conference back to Roger Jeffs for closing remarks. And if we can let Matt back in.
Chris, Matt had one more question. Could you let him back in so we can ask it? No problem. One moment, please. Thanks.
Chris had one more question. Could you let him back in so we can ask it? No problem. One moment, please. Can you hear me?
Yes, Mr. Kaplan, you are now able to ask your next question.
Great. Just a quick question in terms of with the moving parts associated with the hatch latch litigation and the PTA group decisions, what's your current thoughts on the timing for full approval now?
Yeah, great question. Maybe I'll ask Rusty to opine on sort of how he sees the timeline for the legal situation playing out.
Sure. So, thanks for the question, Matt. So, you know, we really have two separate, you know, opportunities to get clear of the patents at this point, the appeal of the Hatch-Wattsman decision and the appeal of the 793 IPR, and both those are on different timelines. So, first is the appeal of the Hatch-Wattsman decision. As I noted earlier, briefing's now complete, and we're just waiting on the court to set in oral argument dates.
We think that date will be sometime in the second quarter or third quarter of this year. And once oral arguments been held, we expect the decision could come as quickly as a few days after oral argument or it could take a couple months depending on whether we get some reaffirmants or not. And so if in that decision, the 066, the district court's decision regarding the 066 patent is upheld.
And if the 793 decision of the district court is overturned, we would be able to proceed immediately to seek full approval after that. So that would put it sometime in the second, third, fourth quarter this year. Alternatively, if that appeal results in the 066 patent decision being upheld, and the 793 decision of the district court being upheld. state policy on their stove wasn't immediately upheld, if at any time the difference was woefully wash water drainage plants of water drainage restore C
then we would have to wait for the IPR appeal to play out. And as we noted, we expect that oral argument that will likely be held sometime fourth quarter this year or first quarter next year, or first half of next year. And again, same thing after that oral argument is, we could get a decision as quickly as a few days afterwards or as long as a few months afterwards. Thank you, Rusty, very clear. Operator, next question if there are any.
Thank you. One moment, please. NIT, no further questions at this time in the queue. I will turn the call back to Roger Jeffs for closing remarks. Great. And firstly, I want to say we appreciate everybody calling in and listening. I hope you share the excitement we have around our building momentum. We're really trying to build on the back of some.
very positive news as it related to the legal situation. And as we continue to go to the market, you can hear our excitement around the product capabilities of utrevia and how it could be introduced uniquely into the marketplace and benefit patients in a differentiated way. We thank you again for joining us and we look forward to reporting on our continued progress in the coming quarters. Thank you everyone. Bye bye.
Please conclude today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.