Q3 2023 Liquidia Corp Earnings Call

Good morning, and welcome everyone to the liquidity of Corporation third quarter, 2023 financial results and corporate update conference call My.

My name is Terry 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.

Sections will be provided at that time for you queue up for questions.

I would like to remind everyone that this conference call is being recorded.

I'll now hand, the call over to Jason Adair Chief business Officer.

Thank you Terry.

It's my pleasure to welcome everyone to liquidity as of third quarter 2023 financial results and corporate update call joining.

Joining the call today are Chief Executive Officer, Dr. Roger Jeffs.

<unk> financial Officer, Michael Pizzi.

[noise], Chief commercial Officer, Scott Musil Chief.

Chief Medical Officer, Dr. Rajiv Saga, and general Counsel Rusty sugar.

Before we begin please note that today's conference call will contain forward looking statements, including those statements regarding future results are 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 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.

I would now like to turn the call over to Roger for our prepared remarks, after which he will open up the call for your questions. Thank.

Thank you Jason Good morning, everyone and thank you for joining us to.

The third quarter was marked by continued and positive steps to change the future of the company the ph market and the lives of patients we are committed to sir.

We have built a portfolio that we aimed we believe includes the most promising products in the fastest growing area of the ph marketplace and hilltop cross sell for the treatment of pulmonary arterial hypertension or ph and pulmonary hypertension associated with interstitial lung disease or ph ILD.

Many of you know already that you can track our dry powder formulation of <unk> using a low effort simply use pocket sized dry powder inhaler has.

It has the potential to be the first and best choice when adding the process I come to the patient's treatment regimen.

And supported this a recent summary from our open label clinical experience shows how durable and Titratable neutropenia treatment can be where we have treated patients for as long as five and a half years and.

And have titrated to doses now equivalent to 30 breaths Taipei set four times per day.

I want to emphasize those matters as it has been demonstrated across all routes of process I can use that higher doses equate with better patient outcomes <unk>.

<unk> ability to dose higher has the potential to significantly broaden and improve upon the therapeutic index and utility of in health care process General administration as it currently exist.

At the same time, we have seen promising early evidence of clear benefits and our sustained release in Hampshire processing a program called <unk> six.

Despite the zama formulation delivered in two administrations per day offers more consistent drug exposure throughout the day, including during sleeping hours.

Each dose has delivered an approximately one minute using simple titled breathing with a portable next generation breath activated nebulizer.

We have plans to share data at conferences in 2024.

But our preliminary data suggests that patients in the open label study who have transitioned from Televisa.

Had been able to safely titrate to higher doses.

Including daily doses comparable to twenty-five breath of Taipei set four four times per day without any reported third paying to date and only mild to moderate and expected adverse events and a minority of patients.

We very much look forward to sharing more details on the development and registration path for this program during our future earnings calls.

Which will be informed by our type C meeting scheduled with the FDA next month.

While we are very excited about our <unk> program.

We recognize that most of our investors attention is focused on near term legal events.

The good news is it legal story has now become greatly simplified theres just a single patent 703 patent that currently supports the injunction preventing the FDA granted full approval of your trip yet.

All claims of that patent were found to be invalid by the patent travel appeal board or <unk>.

The Pizza has favorable decision is currently being appealed by United Therapeutics.

With oral arguments scheduled for December 4th we expect a decision could be issued as quickly as a few days after oral argument if somebody affirm it is granted.

Or within just a few months after oral arguments the formal written decision is provided.

Regardless, if the <unk> decision as a firm we will immediately seek to have the injunction lifted and request final approval from the FDA.

In the event of such an approval, we will execute on our plan to change the landscape of the ph market as quickly as possible.

For this reason I have asked Scott Musil, our chief commercial officer to introduce himself broadly to our investors and to provide an update regarding our commercial preparations Scott.

Okay.

Thanks Roger.

Introduction for those that I have not yet met I've had more than 20 years in the pharmaceutical industry building commercial teams and launching products.

13 of those years in the pulmonary hypertension market, including leading the marketing of Coprostanol products, where module in <unk>, So and ultimately the launches of <unk> and <unk> injection two years ago I joined liquidity when rare Jan accompany I cofounded with Roger and others merged with liquidity.

Since then <unk> been building, our commercial strategy and our team for the upcoming potential launch of your trip yes.

We've really built a strong senior commercial management team across marketing market access and sales leadership on the marketing and market access side. Our team is ensuring that patients who are prescribed <unk> will be supported by a full suite of services, including high touch specialty pharmacy services, a patient access program and our Copay card program.

On the sales side very exciting just last month, we were pleased to complete the onboarding of our field force of about 50 sales reps, who share my passion for helping patients suffering from rare diseases.

Collectively our sales team has an average of nine years selling rare disease products with the majority of the team having sold ph products previously.

The team is now in the community and academic center offices increasingly awareness of liquidity and supporting to process no injection more widely than ever we want all physicians to know that liquidity is here for patients at any stage of the disease progression.

As a result of our preparation to date I am proud to say that liquidity is ready and well positioned to launch <unk> in both PIH in ph ILD upon final FDA approval.

With that I'll pass it over to Mike to review the last quarter's results.

Thank you Scott and good morning, everyone. Our third quarter 2023 financial results can be found in the press release and the 10-Q filed this morning as you will see liquidity continues to operate and spend on value creating activity in a judicious manner.

We ended the second but we ended the third quarter with $76 2 million in cash equating to a net burn of $17 $1 million over the first nine months of this year during.

During the quarter revenue from <unk> injection increased.

<unk> $5 million compared to the same quarter last year due to favorable gross to net charge back and rebate adjustments, which offset lower sales quantities compared to the same period in the prior year.

Cost of sales decreased slightly to <unk> 6 million as compared to third quarter of 2022 primary primarily due to lower intangible asset amortization due to the extension of our agreement with Sandoz to commercialize <unk> injection.

R&D expenses in the quarter were $7 4 million, an increase of $2 9 million compared to the second quarter 2022, and included increased spending to build prelaunch commercial supply advanced our recently licensed <unk> clinical program and support head count increases.

General and administrative expenses were $10 6 million for the third quarter of 2023 compared to $6 7 million for the same quarter in 2022, the increase of $3 $9 million was primarily driven by legal fees related to our ongoing litigation personnel in commercial expenses in preparation for the potential launch of you chop, yet and an increase in stock based compensation expense.

As we look into December and the year beyond we will continue to apply the same financial discipline to manage through the timeline of legal and regulatory events, while also being opportunistic as those both those events unfold I'd like to I'd like now to turn the call back over to Roger.

Thank you Mike.

I hope investors can hear our enthusiasm and level of excitement. We are now fully prepared to enter the marketplace and upon approval promote the full benefits that you're tripping a congrats.

The patients in their journey to feel better.

With that I would now like to open the call for questions.

Yes first question please.

Thank you.

You asked the question you will need to press star one on your telephone and wait training to be announced.

To withdraw your question please.

Please press star one again.

Please standby, while we compile era sir.

Our first question is from Greg Harrison with Bank of America. Your line is open.

Hey, good morning, guys. Thanks for taking the question.

Wondering how youre thinking about the opportunity.

<unk> in terms of size of the addressable market in any segment that would be a focus for your efforts and are there any learnings you've gained from your competitors launching loyalty.

Yes, great Great question Gregg. Thank you for the question.

Scott if you wouldn't mind, if you could give your commercial view of that question.

Yeah sure so.

We feel like the market for ph ILD the prevalent market is about 60000 patients.

As you know and we.

We all know that there is a.

Significant potential here because of the unmet need we think that actually two companies in that space educating.

Center positions you would probably see these patients already but also community physicians, who may see these patients but not recognize it.

Should grow that market quickly. So we're excited about it we think we think it's all addressable Rajiv can chime in if he sees that differently, but we think that that we have a significant potential here.

Yeah, Rajeev any further comments on that.

Yes, Greg just to highlight regarding.

The type of patients in the classification of these patients as you know.

Over 200 different types of interstitial lung diseases.

Obviously are still learning, which one of those continue to unfortunately develop this condition of public hypertension, but I think we remain focused on identifying.

Broad categories idiopathic interstitial pneumonia is autoimmune diseases hypersensitivity pneumonia. These are these are the categories inclusive of combined public for both of them seem at that time.

Tend to develop coming out retention, so focus had gotten earlier diagnosis and earlier treatment.

Opportunities, we believe will quite will be quite impactful for these patients that also the physicians who are treating these these cohorts.

Okay.

Great. Thank you Scott. Thank you Rajeev operator next question.

Thank you.

Amit.

Yes.

Yes.

Our next question comes from Serge Belanger from Needham Your line is open.

Hi, good morning, Thanks for the updates.

First one on the six six program.

Going into the type C meeting next month.

What are your expectations.

In terms of what is needed to get to.

Our filing.

Okay.

Going open label trial.

Would that support a filing where you think you'll need to conduct placebo controlled studies.

And both ph in ph ILD.

The second question, maybe for Scott maybe.

Kind of a follow up on that.

The previous ph ILD question, if you could just talk about.

How different that the scrubber bases for ph in ph ILD, how much overlap there is between the two.

Yes. Thank you. Thank you Sir.

Yes.

Steve If you wouldn't mind talking about or at.

At least preliminarily are unsuccessful six registration strategy kind of what we see as the path forward.

Discussing with the FDA.

Yes.

ILD.

Sure. Thanks, Serge so as we've discussed on prior calls.

The goal of our.

Type C meeting with FDA overall.

Clinical program is to discuss with them what is the path to regulatory approval, we believe that.

Our proposed clinical paradigm of advancing a single phase III study.

In ph ILD that placebo controlled using our 606.

Achieving a robust robust primary endpoint will lead to the ultimate approval of both ph and ph ILD in the near future and that would be inclusive of adding the safety profile of the open label ongoing study.

600, <unk>, that's currently enrolling to.

To date.

Scott.

Yes, so the ph ILD HCP market.

It's as you might expect.

H centers the centers of excellence due to the Mayo et cetera.

Not only treat ph, but they treat ph ILD as well as the other forms of pulmonary hypertension.

And then you have what's usually just labeled the community physicians, mostly pulmonologists.

That are treating ILD, but may not be diagnosing or treating.

Some of the numbers that we see if you think about us having 5000 targets overall it would be maybe 2000 of those targets would be doctors, who do not prescribed process eichmanns or the more serious PIH med. So you would for from that that they are not treating ph ph ILD. So we are.

Sized to cover all of those more than adequately and so the goal in two different segments is a little bit different obviously when youre in the centers you want to make sure that they are reaching for our drug.

But when you are in the community you want to make sure that they are aware of the severity of ph ILD and the probability of ph ILD and then they're diagnosing it and if they'll treat it that's great and if they want to make sure that that patient gets to a center of excellence they can.

That's great. Thank you.

Thank you Sir.

Operator next question.

Thank you for the question.

Our next question comes from Kennedy's USD from Jefferies. Your line is open.

Good morning team.

Roger in the past you've kind of.

<unk> potentially being kind of a profitless pipeline of first choice, maybe you could expand on that thought.

Specially.

Potential launch soon.

And then the second question can you remind us what is the status of the 061.

Got it thank you.

Yes. Thanks for the question companies. So I think Rajiv maybe if you could talk about the pillars of <unk> that will help position. It has that potential process that kind of first choice and then Russ.

You can talk about the status question, if you will rajiv.

Sure. Thanks, Scott.

So so firstly just to re highlight.

We remain quite enthusiastic about your trip.

Using our print formulation.

As well as a low resistance device, we believe that this will be quite differentiated in the market, especially in the <unk> market.

We have always.

Discussed that some of our key pillars that <unk> offers are improved.

<unk> ability.

And as Roger alluded to dose does matter and we continue to highlight that you trip you remains quite tight tradable.

In our open label extension study, which is known as Aspire study. We have now reached doses equivalent 30 breadth of <unk> four times today, which is quite remarkable.

To see these high doses being used safely in these patients and we believe all of these will portend to improve clinical outcomes for patients both in PHA ph D and most importantly, we show durability with the use of your trip with now patients being exposed.

For as long as five five and a half years, which we believe highlights the durability in compliance with this.

With your trip itself in this population.

Alright, Thank you rajeev.

And he will speak to the status of the patent.

Sure and thanks for the question can be so.

I was just wondering I think you are referring to the patent application that received a noticeable.

<unk> patent applications, we received a notice of allowance back in late June.

Issued an 8-K about.

As of today that patents still has not issued.

And they have not yet received a notice of issuance.

That's a little bit atypical for it to take that long for that patent issues. So we're not we're not we don't have visibility as to what's going on at the United States patent and trademark office with respect to that patent.

However, what I will say is we're anticipating that we'll issue we're preparing for it issue and we'll be ready to address it.

Great great.

Thank you Rusty.

Operator next question.

Thank you for your question.

Our next question comes from Julian Harrison of BT Hygiene. Your line is open.

Hi, good morning, Congrats on the progress and thank you for taking my questions I have some related to the last one just asked on the ph ILD pattern.

United received notice of allowance for back in June.

I guess after the FDA designated ph ILD exclusivity expires for United in March next year could this patented or patent application has any relevance to your truckloads eligibility to receive full approval in ph ILD, assuming youre already have full approval and PIH at that point.

Yes, so I'll speak to the regulatory component. So in terms of we have a particular date Julien January 2024.

Sure.

Ph ILD the amendment that we filed in July.

There would be no implication in terms of.

Getting a tentative approval, which would be granted at that time because market exclusivity does not expire until end of March 24.

So we don't see any gate between whatever may happen with that patent.

The regulatory approval process Russ do you want to speak about the commercialization post that.

Sure. So Julien. Thank you for the question. So so to be clear there will be no 30 months stay that attaches to this new patent.

So the only way it would potentially have an impact would be if United Therapeutics is able to go into court convince a judge that they should get some sort of an injunction.

It's perhaps from launching as I think we said on the last call looking at this patent looking at how this patent compares to the 703 patent.

Numerous studies that were done by medical professionals.

The launch of <unk> and the date that this new patent was filed.

There's a lot of prior art.

Honestly, if they started which we anticipate they will we will have to deal with that in court, but.

Again, the only way it would impact us if they are able to convince the court that notwithstanding all of that prior are they should be entitled to an injunction.

Very helpful. Thank you.

Thanks for the question Julien.

Operator next question.

I am showing no further questions at this time, so I would like to turn it back to Roger Jeffs.

Thank you Tracy.

So I intentionally let the team answer most of the call today, because I wanted to.

Investors to hear the depth and quality of the team that we have that are ready and very excited about launching your tripping in the very near future.

The other thing that you can here is the quality of <unk> product profile and its potential to quickly differentiate become the prostacyclin, our first choices companies asked about.

We thank you for joining us today, and we look forward to continuing to update you on our progress as we bridge to these important value inflection events. Thank you.

This does conclude the program you may now disconnect.

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