Liquidia Corporation (LQDA) Earnings Call Transcript & Summary

Yes. I mean we think ILD is very much an untapped market. I mean we've done our own research. We believe that there are 60,000 patients out there to treat. We feel that, again, trying to understand what -- how the Tyvaso DPI launch is going. We're less concerned there. What I think we realized is that ILD patients have severely compromised lung function. Those people with -- those patients with compromised lung function are going to require a lower resistance device. We feel our ability to have a low resistance device to be able to titrate in our clinical trials. We got up to the equivalent of 27 breaths of Tyvaso. So we really feel confident that once we get out to the market, once we get ILD in our label that we will really be able to expand the market and increase patient share considerably.

Okay. 60,000, that's a pretty big number relative to how many patients are on inhaled treprostinil currently. How should people be thinking about what portion of that market is really addressable and how far you could penetrate into that?

Yes. So if you just compare it to PAH. So PAH, we believe, has roughly 40,000 patients treated. About 15,000 patients are treated with prostacyclin. A little less than half of that is currently treated through inhaled treprostinil or Tyvaso. So when you look at the opportunity that 60,000 is obviously a large number. It's very much been an underserved patient population, tremendous amount of education that we'll do, especially at the launch with our sales force and with our medical affairs team. So we really feel that we are positioned nicely to be the process cycle and a first choice, both in PH-ILD and PAH and frankly speaking, look at -- and especially the ILD market as a multibillion-dollar opportunity, a multibillion-dollar market that we're going to be launching into.

Okay. So you kind of see that whole 60,000 as potential patients for your treatment. It's not a subset?

Absolutely. I mean it's always going to be subset. You're never going to get all of the patients. But we feel that there is -- we're going to learn a lot. We've learned a lot about ILD in the last couple of years. I think we'll continue to learn more. And as voice gets out and education gets out from literally the only 2 companies that will have products to treat this terrible disease. We feel that the opportunity is really -- is a great opportunity, most importantly, for patients to have an option and to have a treatment for this debilitating disease.

Yes. Okay. Now you recently had oral arguments in the appeals. Can you give us an update of where the legal process stands and outline the different scenarios that would affect the YUTREPIA launch timing?

Yes, absolutely. So it can be somewhat nuanced, but to really to break it down, we've been guiding for several months that we expect the launch to occur sometime in the first half of 2024, if not earlier. So there's 2 paths that we're going down. As I said earlier, there were 3 patents that were asserted against us, only 2 remain. There was the Hatch-Waxman trial in U.S. District Court in Delaware last year. There were 2 rulings given there. One, on the 066 patent, we won. On the 793 patent, we lost. Both us and United are appealing those rulings and actually oral arguments on that appeal occurred last week. We are very happy with how the oral arguments went. And we would expect to hear a ruling between -- somewhere between 1 and 3 months. On the third ruling that is outstanding is the U.S. PTAB. The U.S. PTAB validated their 793 patent in July of 2022. They denied a rehearing request in February of 2023. And now we are in the briefing process for that appeal, which we expect to be heard in oral arguments to occur sometime towards the end of this year or early next year. So I think if we're able to be victorious on the Hatch-Waxman appeal on 793, we could theoretically be able to seek full FDA approval in 1 to 3 months from now after that ruling is given. If those original rulings are affirmed and we get to the PTAB appeal that will occur later in the year, if that ruling is affirmed in our favor, we would be in that first half of 2024 range. So we're very excited. Like I said, we're focused on getting ready for commercial launch. We're preparing for launch. We're spending to a launch right now and investing into the launch. And we feel really excited that whenever that time comes, whether it's in Q3 of '23 or the first half of '24, we will be ready.

Okay, great. And can you remind us of the cash runway and plans for funding the YUTREPIA launch?

Yes. So back in January, we entered into an important transaction with HealthCare Royalty. We did a revenue interest financing agreement where it was a $100 million facility. We received $32.5 million upfront. There are 3 additional tranches. Tranche 2 is an additional $7.5 million if we do a business development transaction. There's a $35 million tranche at the time that we clear the legal risk. So again, it's not an FDA approval. It's not at first commercial sales. When we get the order to allow us to go to the FDA for approval, we get $35 million and then there's an additional $25 million tranche that is at the mutual option of both parties. It was an important transaction for us. HealthCare Royalty is a great partner, a reputable firm. We feel that it really validated both our legal case and also our commercial thesis here. And as we've talked about ranges of timing of when we could launch sometime in the back half or back third of '23 or into '24, we feel confident that if we could do it on the early -- launch on the early end of that range that our current capital could actually get us to profitability. But at the very least, will take us -- be able to take us through launch and achieve all of our priorities to get ready for that launch.

Okay, great. Speaking of profitability, what is the way to think about the launch of YUTREPIA and just the trajectory that you would expect as far as uptake?

Yes. So listen, we're very excited. It's a product that most importantly, patients need, patients haven't had a choice in this space in 20 years for us to be able to give that choice is going to be very important. We've said and we believe that we could be cash flow positive as a company within 2 or 3 quarters after launch. As I said earlier, when you look at the current PAH market with the 40,000 patients treated, 15,000 on prostacyclins and the ILD market, which is largely untapped right now. We feel that this is a -- like I said, the overall market opportunity is a multibillion-dollar market. From where we stand right now in ILD, there are no other treatments coming on the horizon in the short term. So we feel a real opportunity and an opportunity to compete and ultimately win and become the prostacyclin of first choice in both PAH and definitely in PH-ILD.

Okay, great. Well, less than a minute left. You mentioned BD. How are you thinking about that? And what opportunities are there down the road?

Yes. So we are focused now. First and foremost, we're focused on getting YUTREPIA approved and launched. But at the same time, we're building a best-in-class commercial organization, a best-in-class R&D and medical affairs organization. So we're always looking for opportunities for molecules, for products that could complement YUTREPIA and generic treprostinil. So while our focus is really on launching YUTREPIA, we are absolutely evaluating every opportunity. And if the right opportunity comes up that we feel is the best -- in the best interest of our shareholders, we'll absolutely look to do that.

Okay, great. Well, with that, our time is up. Michael, I'd like to thank you for joining us today and thank everyone out there for listening.

Thank you so much.