Liquidia Corporation (LQDA) Earnings Call Transcript & Summary

This Healthcare Conference. And next company presenting here today is Liquidia. I'm really, really excited to have Michael Kaseta, who is the Chief Operating Officer and Financial Officer; and Jason Adair, who is the Chief Business Officer. Thanks, guys, for joining. Exciting times with the story. So yes, I just wanted to just kind of give you the floor, give a quick sort of background about the story, where you are, like 3Q update, and then we can take it from there.

No, Ash, first of all, I really appreciate you and UBS for having us. It's been a great time at Liquidia. We're really excited for where we are. We just did our Q3 earnings last week. And we -- you talked about how the launch is going. We launched our product in May of this year. And in our first full quarter of launch, we have reported that we've had over 2,000 prescriptions over 1,500 unique patient starts. That translated to over $51 million of revenue. And we actually were profitable as a company in our first full quarter of launch and generated positive cash flow in September and October. So, it's a great time to be at Liquidia. It's been a long time. We've been committed to this patient population and these physicians. And I think we're finally able to deliver on that promise to give patients a choice, a choice that they've been waiting for, for several years for a product that we feel is differentiated and ultimately can make patients' lives better for a long time.

Great. Yes, pretty exciting times. I mean, just like with the early launch, I think a lot of excitement, and I think you've blown past like all of the expectations that people had in terms of the launch. So, congratulations to you for that. Yes, I think, obviously, I'm sure you're getting this in every single meeting, like where are the patients coming from? So yes, just to kind of address that. Yes, PAH, PH-ILD, like naive, like what line of therapy?

Absolutely. So, when you look at what we're most excited about is that we've seen patients coming from every aspect. We've seen PAH patients, PH-ILD patients. We've seen naive patients in both diseases. We've seen transition patients from Tyvaso, Tyvaso DPI. And also in PAH, we've actually seen oral transitions as well. So, what we're most excited about is, and what we've always thought is the flexibility, our product profile of being able to dose to higher doses using an easy-to-use device really gives patients flexibility regardless of where they are in their disease journey to utilize YUTREPIA and ultimately benefit from this great product.

Yes. And has your expectations sort of been different versus like when you -- before launching the product, what you were expecting the source of revenue to be versus now that you have like seen the first quarter essentially, right? Has that come along pretty much the same that you thought that this will be the patient mix? Or is it different in any way?

Yes. So, we've had -- the launch has gone extremely well. We had high expectations. It's obviously outperformed those expectations. I think what has happened is, if you just look at the product profile and what we've done over the last couple of years, and one of those things is our open-label Phase IV ASCENT trial, which took naive PH-ILD patients in the first prospective study using a DPI in PH-ILD. What we've seen, and we've shown these results over the last several months, we feel really proves that hypothesis. And that hypothesis is we've been saying for a long time that more treprostinil is better for patients. And our unique formulation technology, which allows us to manufacture particles of uniform size and shape, that allows us to achieve deep lung deposition, avoids buildup in the back of the throat or in the upper airways. And what we've seen in our ASCENT data is very interesting. And what we've reported on over the last several quarters is 8-week data, 16-week data and 24-week data for the 54 patients that we enrolled. And what that showed was at 8 weeks, these patients were on an average dose of 132.5 micrograms, which is the equivalent of 15 breaths of nebulized Tyvaso, and they showed a walk improvement of 21 meters. As they've navigated to 16 weeks and 24 weeks, they incrementally increased their dose. So, at 16 weeks, we got up to 159 micrograms, which is the equivalent of 18 breaths, and we showed a walk improvement of 31 meters. When we just reported last week, the 24-week data, the average dose was 185.5 micrograms, which is the equivalent of 21 breath of Tyvaso neb and showed a walk improvement of 41 meters. So, when you put that all together, granted it was a Phase IV open-label study. But when you look at our product profile, we're very excited about what we've done. What we've also seen as part of our launch data is a significant amount of -- in PAH of oral transitions. And one of the things that we talked about last week in earnings is that we're going to do a similar Phase IV open-label study in oral transitions. And we're very excited about that. If you look at the PAH market, that oral market is over 10,000 patients and over $2 billion. Oral treprostinil, those products are not easy on patients, difficult to titrate to a therapeutic dose. And our ability to, again, have such dose flexibility, we feel this is a product that ultimately can service those patients as well. And Roger Jeffs, our CEO, has been saying for a long time, he wants to be the prostacyclin, the first choice. And we feel that as time goes by, we develop our product profile by generating clinical data, which we think is very important to our commitment to these patients and these physicians that we can slowly but surely do that and continue the momentum that we've seen in the early launch and deliver this product to as many patients as we can.

Yes. Is there like a specific metric around like the PAH versus PH-ILD, the way the split of the patient mix came out to be? Or is it like too early to start to comment on that?

Yes. I mean, I think from a PAH and PH-ILD, what we've said last week at earnings is that the majority of patients are in PAH. But PH-ILD, the PH-ILD patients are growing rapidly. We've long said that the PH-ILD opportunity is a large opportunity. We believe the addressable market is about 60,000 patients or more. UT has, said on multiple occasions that they've, penetrated less than 20% of that market. We look at that as a long-term investment. It's a long-term investment. This is a relatively new disease state. The first product was approved less than 5 years ago. We are in the process of building relationships with doctors, helping them go through disease education, identifying patients, diagnosing patients, and ultimately treating those patients. So, I think with us and United Therapeutics having boots on the ground, sales forces, medical affairs team, it's going to help everyone. And ultimately, we feel that will be critical as we build that market and increase our share as we move forward. So, we're excited for where we are. Like I said, the opportunities in both PAH and PH-ILD are massive, and we want to do what we can to get that message out to continue to show the benefits of YUTREPIA and hopefully treat as many patients as we can.

Yes. Yes, that's great. Yes. I mean, it's a pretty exciting launch with two different end markets that you're going after, right? I mean, from your like commercial effort standpoint, is there more or less of a focus on one versus the other? And I know like for PH-ILD, like right-heart cath can sometimes be a little bit of a stumbling block in terms of identifying these patients. Just like has your experience been any different in that regard?

Yes. So, when we built the sales force, we built that sales force with, in mind of, of having a national-based sales force focused on both large centers, but also local community. So, our sales force targets over 6,000 doctors. We've had over 6,000 -- I'm sorry, over 600 unique prescribers to date. So, there's still a lot of work and a lot of opportunity there. We are building those relationships every day, I think one of the keys for us, our sales force was in -- has been in place since really the end of 2023. Up until launch, they were building relationships with doctors, talking about our PRINT Technology, which we feel is the bedrock of our product profile and the differentiation from our competitor. So, that was very helpful when we launched to be able to hit the ground running. But that focus remains unchanged, talking to cardiologists, pulmonologists, doctors who treat PAH, PH-ILD treat both patients. It's always been our focus. It will continue to be our focus, and we look forward to that continued growth.

Great. Great. And then on the PAH side, you said like oral transitions, right? Are these like the PDE5, ET1 generic combo drugs or like also like Uptravi transition?

Yes. So what we're really focused on is the oral prostacyclin market. So it's really Uptravi and Orenitram, we which -- again, we believe is over 10,000 patients. So that opportunity is very large, both from a switch point of view, but also looking at YUTREPIA having the product profile that ultimately could be the first-line prostacyclin therapy for these PAH patients. So again, everything we do is going to be based in clinical studies. So that's why we're going to kick off this open-label Phase IV study to study this and see what we find out. I think it's important for doctors to have data. And like we've done with our ASCENT trial in PH-ILD, we'll look to do the same with the oral transition study.

Great. I know there are a few different dynamics playing out in the market overall. Like maybe if you talk about this kind of oral transition market, ralinepag that like United Therapeutics is studying, like if this is where the focus is for you for PAH, like if ralinepag shows successful data and is able to enter the market, then like how could that change where you are chasing the patients?

I mean, we believe that YUTREPIA has a product profile that is very favorable from an adverse event perspective. The oral agents that are out there, it's difficult on patients. The off-target GI side effects are pretty significant. Haven't seen the data in ralinepag. Our focus is helping patients through their patient journey, and we'll continue that focus. And like I said, there's -- it comes from a lot of places. And whether you're a PAH patient on oral, currently on inhaled, if you're on parenteral treatment, we feel that we have a product that can help anyone. And obviously, when new product and new data comes out, we'll evaluate that. But our focus is very clear, and we feel very confident in our ability to grow our market share, both -- grow the market share and grow the market in both PAH and PH-ILD.

Great. Awesome. So yes, just maybe from like an access standpoint, so the commercial versus Medicare dynamics. So where are you seeing the access right now? And yes, what's the plan to sort of build it out?

Yes. Our goal from the beginning was to make sure that patients had an opportunity to choose. Patients have been longing for choice for years. They were denied that choice for a long time. They finally have that choice. In order for them to fully realize that choice, there can be no hurdles placed in front of them around access. So that has been our goal since the beginning. And as we had stated at launch, we have signed contracts with the three major commercial payers. We -- again, as we have previously stated, we had new-to-market blocks against those three payers for the early part of the launch. I'm happy to say that two of those new market blocks have already been removed. The third is in the process of being removed. Once that's complete, I think we will have been successful in removing those barriers and making sure that we are not negatively impacted by payers in Part D, in commercial, and in government-mandated channels.

Got it. What do you expect to be like the rough split between the commercial versus Medicare in the new year maybe?

Yes. So, I think as we remove those blocks, what we have previously talked about is that the market is -- what we've seen is about 50% Part D, 35% commercial and 15% in the government-mandated channels like VA, DoD, Medicaid, 340B. We've been a bit skewed more towards the Part D in the early part of our launch for the reasons that make sense around the new-to-market blocks. As we move into 2026, I would expect that we would move back towards those percentages. And again, they're rough estimates, but there's nothing that we've learned that would change what those expectations would be.

Great. Great. Is there this type of a dynamic right now that because like the 2,000 out-of-pocket maximum that these patients might have hit already by this time, then you have more of like uptake coming because of that factor. But like when you start the new year, you won't have that tailwind to begin with?

Yes. So I'll be honest, I don't -- with the passage of the IRA and maximum out-of-pocket reducing, these are sick patients who tend to have comorbidities and are probably on several products. The idea that, that maximum out-of-pocket for Part D patients would be a barrier for us, I think, is not likely. And I don't think that, that would have much of an impact as we move forward.

Yes. Yes. That makes sense. Yes. So just maybe from a competitive standpoint, I want to ask a few questions. I mean, there is a lot of focus just trying to look at -- every time there's a new therapy in this market, right, people are like looking at how is the other company being impacted. So, we saw this dynamic with Winrevair and then now seeing with you guys that -- I mean, the United Therapeutics quarter was decent and didn't really see any kind of an impact. And from the commentary that you're making like oral treprostinil product, it doesn't necessarily make me believe that like it is taking patients from Tyvaso DPI or nebulizer. Is that fair to assume at this early...

Yes. I mean, we've publicly stated that 25% of our patient starts have come through transitions. Being that there's only one product approved in PH-ILD, I think it's safe to assume that, that transition more likely than not is from the competitive inhaled treprostinil products. And in PAH, we said 40% of those transitions have come from oral and the rest presumably would have come from Tyvaso and Tyvaso DPI.

Got it. Okay. It's just not starting to be felt right now in the numbers. But as you get bigger, then we might start to see more of that dynamic.

I mean, I'll be honest, we're focused on Liquidia. We're focused on patients. I mean, they can focus on YUTREPIA and Liquidia all they want. We're going to focus on Liquidia also. So that's what our whole goal here is to service patients, offer patients choice that they've been denied for years, and we will continue to do whatever we can to offer that choice.

Yes. I mean, the value proposition just in terms of getting more dry powder, better deposited in the lungs, right? I mean, maybe just give a brief sort of artifact of how are -- how is YUTREPIA able to do that? Because I saw like -- I mean, United Therapeutics also kind of announced like higher doses for Tyvaso DPI. So, I'm trying to understand, is that effectively trying to catch up to the product profile that you have? Or where does it shake out?

Again, I'll focus on YUTREPIA. The foundation of what we believe is our differentiated product profile rests in our formulation technology. Our PRINT Technology allows us to manufacture particles of uniform size and shape that were specifically designed to reach the -- to achieve deep lung deposition. And that, in effect, our belief is that we will be able to reduce side effects and ultimately be able to dose higher to those higher doses. What I think is very encouraging is, again, if I can go back to the ASCENT data, we've titrated patients at 24 weeks, as I said, up to the 185.5 micrograms, which is the equivalent of 21 breaths of Tyvaso neb. When you think about that, as part of the readout of that trial, we also have applied what we call a modified cough score. So when patients enrolled, they had a baseline cough score. And what I'll say is that baseline cough score from the time of initiation to 24 weeks has remained unchanged. So, from a tolerability point of view, again, it's a Phase IV open-label study. So, full disclosure on that. But I think it's very telling that we've been able to go to significantly higher doses, cough has remained the same. As we said, more is better, and we've achieved 41 meters of walk improvement. I wish I could state clinical trial in DPI and PH-ILD. Unfortunately, there is none. We have the data that has been published, and they were -- they showed a 70% discontinuation rate at 42 days through -- in National Jewish' real-world data. Again, I don't want to speak for them, but I don't know how giving more of that powder is going to improve that side effect profile. So again, we're going to focus on YUTREPIA. We're going to focus on YUTREPIA's product profile, and we're going to continue to serve these patients.