Liquidia Corporation (LQDA) Earnings Call Transcript & Summary

Next company presenter at the BofA Annual Healthcare Conference, Liquidia Corporation, joined by Michael Kaseta, Chief Operating Officer and CFO; and Rajeev Saggar, Chief Medical Officer. Gentlemen, thanks for joining us. For those on the line, my name is Jason Gerberry. I'm one of the Mid-cap Biotech Analysts of BofA.

I don't know if you guys -- you guys just reported your quarter this morning. Any kind of I guess, introductory remarks you want to offer up to maybe get things started in terms of the latest and greatest. I know there's a lot of focus right now on your lead product, YUTREPIA and sort of the FDA situation. So why don't we start there?

Yes. So Jason, really appreciate you having us. We're excited to be here. It is a really exciting time to be at Liquidia. We are on the precipice of launching our first product, YUTREPIA, in both PH-ILD and PAH. We have a dry powder formulation of treprostinil that utilizes our proprietary formulation technology that allows us to manufacture and produce particles of a uniform shape and size that allows us to get to the lower range of the respirable range, which we feel really will be beneficial to both PAH and PH-ILD patients who are looking for choice in inhaled treprostinil and excited to launch in both PAH and the emerging PH-ILD space where there's a tremendous amount of patient need there.

Got it. Okay. And so you've gotten tentative approval. You've run a clinical study in PAH. Maybe what in terms of your understanding or kind of like the key issues outstanding as it pertains to YUTREPIA securing final approval for a broad label for the product that it references as 505(b)(2) reference to TYVASO?

Yes. So as of April 1, we have no legal impediments to prevent from getting approval in both PAH and PH-ILD. So we filed an amendment to our original NDA to include both PAH and PH-ILD back in July. It was accepted by the FDA in September. And we are as of April 1, able to get approval in both PAH and PH-ILD. We are awaiting. We are in dialogue with the FDA. We are awaiting that final approval. We are ready to launch. We have built up both our commercial infrastructure, our sales force, also our commercial supply to be ready to launch immediately there after that final approval.

Okay. I know there's not like much you can do to speculate in terms of kind of where FDA is at in terms of their process and whatnot. Maybe if you want to address the United Therapeutics citizens petition that was filed and making allegations regarding your API manufacturing source. And to the extent that, that could be a limiting factor to approval or just a nonissue from your perspective?

Yes. So just to give some background, United Therapeutics filed a citizen's petition to raise awareness at the FDA of a consent decree that an importer -- that is part of our supply chain was issued in January of 2003. What I'll say plain and simple is it's just another desperate last-ditch effort for [ U-Ther. ] to keep YUTREPIA off the market. What we know is, one, that the consent decree had nothing to do with treprostinil. They manufacture or they import several products. Treprostinil was not one of those. To be clear, LGM, which is the party that was granted the -- or was issued the consent decree is an importer, it's not a manufacturer. On top of that, this issue was this consent decree was entered into in January of 2023, so almost 18-months ago and was -- we are aware, the FDA is aware. And all I can say is at this point that we have no open request with the FDA. So we feel that this should not be an impediment for us to launch.

Yes. And so I believe, typically, there's like a status indication for your fill-finish and then your API supplier. And your point is that the API supplier and manufacturer is actually in good standing with FDA. And thus, whoever is the importer go through is irrelevant to kind of the review of the product?

Well, I think ultimately, this is -- we've been aware, the FDA has been aware of this for over a year. So this is not a new issue for us. It should be -- should not impact our -- the amendment that we filed, and we should be able to be approved.

Great. Okay. And so I guess, along those lines then, ideally, then the pathway forward, hopefully, is approval and then in the statutory or is it 4 or 6-month timeline, that [ CP ] just gets shut down, and that's sort of how kind of those events could play out?

Yes. So we're focusing on approval. And like I said, I think we feel that this should not be an impediment. As I said, we have no open requests with the FDA, and we feel that the amendment is approvable and we're just waiting for that final notice from the FDA.

Got it. Okay. Maybe let's shift to the product, right, and sort of the opportunity that's in front of you with YUTREPIA assuming timely approval here. The revenue opportunity. You've talked about PAH and PH-ILD, and if you are able to get a broad label, I believe PH-ILD more of a white space opportunity, PAH, more of a share battle. Although I know you guys have talked about the oral market as a potential area to make inroads. So as you think about the peak sales opportunity, how would you dimensionalize that?

Yes. So we think it's a tremendous opportunity, both in PH-ILD and PAH. Now to start on the PH-ILD front. As you said, it's largely a white space area. We've talked about an addressable market of at least 60,000 patients. We feel that, that market is largely untapped at this point. United Therapeutics is on a run rate of about $1.5 billion, a little under $1.5 billion of an annual run rate and growing. So we think there's a tremendous opportunity in PH-ILD. Now in PAH, we think there's also a great opportunity there. Our goal is to be the prostacyclin of first choice. With the oral and parenteral prostacyclin markets. There are systemic side effect issues that the current products have. And as a result, we feel YUTREPIA based on our ability to titrate, based on how portable it is and the tolerability of YUTREPIA that we feel that we could be the prostacyclin of first choice and really replace both the oral and the parenteral markets especially with our ability to be able to titrate to therapeutic doses in a relatively short amount of time, we feel very confident that we can -- we really can play there in the PAH market and take sizable share from United and as new patients come on, be that prostacyclin of first choice.

And do you see one market segment is a bigger opportunity for you, given kind of where you're at in the launch cycle of where those markets are in their kind of stages?

Yes, I think if you look at PH-ILD, as you said, and I repeat it, it's largely a white space with a very large addressable market. A lot of education will be required. This is an area where I think with United Therapeutics and Liquidia out doing that education and both at the PAH centers, but also in community docs. We feel really confident that, that opportunity is really large. But obviously, also the PAH opportunity is significant, although there is a lot more competition there.

What do you look at maybe if we were to isolate the PAH, any market analogs for 505(b)(2)s that investors should look to? Or maybe you just look more broadly, right, at brands that you feel like are step change improvements in certain aspects or elements of the product profile?

Do you want to take that?

Yes. So -- talking about Group 1 PAH. I mean I think, first of all, you have to -- I think we acknowledge that the prostacyclin market is quite large. I mean I think the totality of all prostacyclins, orals, inhaled and parenteral probably exceed $2 billion. I think the problem is each of them have a dose-limiting effect. The therapeutic index is quite narrow in range. If we talk about the oral prostacyclin market, the orals are limited substantially by the dose limit, side effects mostly of GI and headaches. Parenterals are limited by indwelling catheters and complexity of that therapy for patients being on a pump, and inhaled since 2009 has been limited by its dosing potentiality, which is limited around 9 to 12 breaths. So I think we feel that the strategy of YUTREPIA, which was brought in, it was studied in patients with PAH that were transitioned from TYVASO as long as patients naive to prostacyclins. I think what we do is we showcase that we can move the therapeutic index past the 9 to 12 breaths. What that does is that allows a singular therapy such as YUTREPIA to come in, offer a singular option to not only providers but also to the patients, it's customizable to the clinical strata. So if a patient is doing well and they're low risk, we can customize that therapy to a certain dose range. If the patient is advancing, you don't need to transition them to a parenteral agent, you can continue to titrate YUTREPIA. I think the fundamental pillars of YUTREPIA being tolerability, titratability and long-term durability, I think will -- I think, be met quite well for patients and providers to come, that's not been offered right now to patients.

When you think about communicating this value proposition and are there any important aspects of a product label that you think are going to be important to telling that story succinctly to prescribers? Or will that be kind of in medical literature. Can you kind of just maybe kind of highlight any specific facets of the product labeling that's important here?

Yes, sure. So if you think about how YUTREPIA was approved, right, this all comes down to its print formulation and the low resistance device. And I think that's really what's going to set the tone. We first did had to do a healthy volunteer study, right, which showcased our [indiscernible] comparability directly to TYVASO at our 79.5 compared to the 9 to 12 breath formulation. The second thing is that we then launched into a long-term open-label safety study. Again, in PAH patients that transition from TYVASO about 45% and 55% in those that were naive to prostacyclin. So first of all, what we do is we understand our side effect profile that's going to be in the label. We know that when we transition patients from Tyvaso to YUTREPIA, people are really worried about cough because its an inhalation therapy. We show that 8 weeks, the cough was 27%. And this is important because Tyvaso DPI when they did a very similar study, when they transitioned from Tyvaso nebulizer to the DPI, at 3 weeks their cough rate was 55%. So that right away is going to be in our label. It shows that this is a very tolerable medication. The second thing the label will show is that we have 4 strengths of YUTREPIA, right? 4 capsules strengths, 26.5 increments that go all the way up to 106 micrograms. But within that -- within the trial and the label itself, we showcase that you can either use 1 capsule per strength or you combine the capsules upwards of 202 micrograms -- 212 micrograms, which is equivalent to 24 or double the therapeutic index typically seen of Tyvaso. And most importantly, that label will also indicate that there's no maximum tolerated dose available, so you can actually go higher. To that end, we're actually conducting a study in PH-ILD with YUTREPIA. We've now achieved 318 micrograms, which is now triple the therapeutic index of now 36 breaths of TYVASO nebulizer or greater. So that will all be constructed within the label to allow that flexibility. Of course, the label will also have the primary efficacy that is on the reference drug of TYVASO. So we'll have the 12-week PAH 6-minute walk change that TYVASO has, we'll also have the change in 16 weeks of TYVASO in 6-minute walk for PH-ILD. To your point, I think what we're really focused on is continuing to get out enough literature about YUTREPIA. That's why the ASCENT protocol currently is being highlighted in our quarterly calls today. That study is enrolling up to 60 patients with PH-ILD. We do anticipate that completing at the end of 2024. But within that time, we will showcase intermittent cuts that data sets, again, to showcase tolerability and titrated profile of the drug.

Right. And given that there's no comparator arm in that data set that would you focus investors in just on the tolerability -- the relative tolerability profile versus maybe what's been achieved with Tyvaso at sort of max doses? Like how would you sort of -- [indiscernible] those expectations?

Yes, I think it's a very important question. As you know, there was no -- there has been no prospective study done today with the dry powder inhaler, and albeit that it's open label, I think it's something that the KOLs built in academia and communities are actually asking for. One thing we do know, right, the only literature that's out there about impact of Tyvaso DPI is really comes from the National Jewish center and their initial blush with Tyvaso DPI is when they initiated TYVASO DPI in patients with PH-ILD, 69% of the patients unfortunately discontinued within a median of 40-days. And of those, about 40% transition back to the nebulizer. So we know there's a tolerability issue with Tyvaso DPI that exists at least on the only published data set to date. So what we want to do is we want to take -- we want to showcase YUTREPIA's print formulation and it's low resistance inhaler, which we think that combination is actually going to be actually enthusiastically adopted by patients with impaired lung function, in this case, PH-ILD. And so it's very important to complete the ASCENT study to enroll these patients, showcase the tolerability, the titratability, within the study we will also have many clinical efficacy variables that we'll start to showcase once these time points are met.

Okay. Maybe if we can shift to your just go-to-market strategy. I imagine it's still too early to talk about price, but just directionally, price discounting strategies in biopharma just don't seem like perhaps an approach that's commonly employed here. And so I mean, directionally some of the reference points that are out there, an appropriate way to be thinking about this? And do you want to be -- do you see price cutting as a viable strategy at all? Or do you really want to focus on the value proposition the drug has and offer price parity?

So I think what's most important to us is for patients to have a choice. And patients and doctors alike have been looking for choice for a long time. In order for us to achieve choice, patients need to have access. And we've been spending for the last couple of years, building dialogue, building relationships with payers, really showing the value proposition that YUTREPIA can bring to patients to the healthcare system. And ultimately, in order for patients to have that choice, they're going to need that access. And we are confident that as we get to market, and we won't talk specifically about our pricing strategy, we'll disclose that once we have full approval. But our goal is to make sure that we have broad access for patients. And we're building those relationships, both on the commercial front, on the Part D front, in order to execute on that strategy. And once we get approval, and we're able to launch YUTREPIA, we'll obviously talk more about that.